Annual Report2018–19

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While every effort has been made to ensure the accuracy of this document, The Royal Victorian Eye and Ear Hospital makes no warranties in relation to the information contained herein. The Royal Victorian Eye and Ear Hospital, its employees and agents disclaim liability for any loss or damage which may arise as a consequence of any person inappropriately relying on the information contained in this document.

Produced by Marketing and Communications, The Royal Victorian Eye and Ear Hospital.

Designed by Viola Design.

Printed on Impact, an environmentally responsible paper made with a carbon neutral manufacturing process. Impact is FSC COC certified and consists of 100% post consumer waste recycled fibre.

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Contents

General Information ..............................................................................2

Chair and CEO Report ...........................................................................3

Board of Directors and Board Committees .........................................6

Board Committees ................................................................................8

Executive Management ........................................................................9

Organisational Chart ...........................................................................10

Donors and Supporters ...................................................................... 11

Key Financial and Service Performance Reporting .......................... 14

Disclosures Required Under Legislation ...........................................20

Attestations .........................................................................................22

Financial and Service Performance ...................................................24

Disclosure Index ..................................................................................31

Financial Statements .........................................................................32

Board Members, Accountable Officer’s and Chief Finance and Account Officer’s Declaration .............................33

Affiliations and Memberships ............................................................81

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General Information

The Royal Victorian Eye and Ear Hospital (the Eye and Ear) has provided state-wide eye, ear, nose and throat health care since it was founded in 1863. The hospital is accountable to the people of Victoria, through the Minister for Health.

Manner of establishment and relevant MinisterThe Eye and Ear was founded in 1863 by the pioneer surgeon, Dr Andrew Sexton Gray. The hospital is a public health service and is established under the Health Services Act 1988 (as amended). The responsible Minister during the reporting period was The Hon Jill Hennessy MP (June 2018 - Dec 2018), The Hon Jenny Mikakos MP (Dec 2018 - June 2019).

Powers and dutiesThe power and duties of The Royal Victorian Eye and Ear Hospital are prescribed by the Health Services Act 1988.

Nature and range of servicesThe Eye and Ear provides a state-wide specialist tertiary and emergency eye and ear health care service. It is internationally recognised as a leader in clinical service delivery, teaching and research in both ophthalmology and otolaryngology.

The hospital operates from two central locations in East Melbourne to ensure ease of access to eye and ear specialists. Services are provided in outpatient and community settings.

As the largest public provider of ophthalmology and ENT services in Victoria, the hospital delivers more than half of Victoria’s public eye surgery and all of Victoria’s public cochlear implants. The Eye and Ear has over 60 different outpatient clinics for the diagnosis, monitoring and treatment of vision and hearing loss and provides a 24-hour emergency eye and ENT health service. The majority of services provided at the Eye and Ear are on an outpatient or same-day basis. In 2018–19 we cared for around 222,645 patients throughout Victoria:

• 161,078 outpatients

• 17,777 inpatients

• 43,790 emergency patients.

The hospital is a teaching and research centre and has key partnerships with the Centre for Eye Research Australia, The University of Melbourne, the Bionics Institute, Bionic Vision Technologies and The HEARing CRC.

VisionA world leader providing exceptional care.

MissionWe aspire to be the world’s leading eye and ear health service through:

• Outstanding patient experience

• Exemplary leadership

• Inspiring our people

• Building a platform for the future

ValuesIntegrity, Care, Teamwork, Excellence

Integrity We act ethically, accept personal accountability, communicate openly and honestly and treat everyone with trust and respect.

Care We treat patients with respect, are compassionate, thoughtful and responsive to their needs and sensitive to diversity.

Teamwork We communicate openly, respect diversity of views and skills and work effectively with partners and in multi-disciplinary teams to deliver the best outcomes for patients.

Excellence We give our personal best at all times, deliver exemplary customer service, monitor performance and seek leading edge ways to improve it.

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Chair and CEO Report

It was another rewarding year at The Royal Victorian Eye and Ear Hospital. We continued to provide excellent care for our patients while working hard to ensure the progress of our redevelopment project.

Our services continued to grow with the hospital caring for 161,078 outpatients, 17,777 inpatients and 43,790 emergency patients.

During 2018-19 we focused on a range of activities to ensure our services were inclusive and that all members of the community were able to access our services.

Working in partnershipDuring the year we utilised our collaborative partnerships to expand service provision to patients in different settings. Building on the success of the Healthy Ears Clinic at the Victorian Aboriginal Health Services in Fitzroy, a new Ophthalmology Clinic was opened in November 2018. This clinic was set up to provide ophthalmology services for both adult and paediatric Aboriginal and Torres Strait Islander patients in a culturally safe environment.

In May, the Minister of Health the Hon. Jenny Mikakos officially opened a new outpatient clinic to treat patients with genetic eye disease. The clinic was established as a partnership between the Eye and Ear and The Royal Melbourne Hospital Genetics Service. It is the only clinic in Australia that focusses on ocular genetic work and provides a ‘one-stop-shop’ for patients with an inherited eye condition or those who are at risk of inheriting or passing on an eye condition due to a family history.

During 2019 a new Cochlear Care Centre was opened in Dandenong to service patients living in Victoria’s South East region. The centre operates as partnership between the Eye and Ear and Cochlear Ltd and is the third of its kind in Victoria. Our Geelong Cochlear Care Centre celebrated its first year of providing services in the Barwon region in March.

The establishment of the Glaucoma Community Collaborative Care Program was an exciting initiative between the hospital’s Glaucoma Service and specific community optometrists. This program has been established to improve access and outcomes for our patients by reducing travel time and costs and reducing waiting times for access to eye-care. Seventeen optometrists state-wide have been recruited to the program and will participate in ongoing professional development provided by the Eye and Ear’s Glaucoma Unit.

Engaging with the CommunityEngaging with the community is an important part of ensuring our services meet the diverse needs of our patients and consumers. When developing our new Strategic Plan for 2019-2021 we undertook extensive community consultation. Throughout November we held forums for staff and community members to share their views on shaping our future direction. The plan was endorsed by our Board in March and will be formally published shortly.

Our Reconciliation Action Plan (RAP) was proudly launched in February. The RAP is an important step towards our reconciliation journey and our commitment to closing the Eye and ENT healthcare gap for our Aboriginal and Torres Strait Islander patients. It is supported by a working group of staff and community members whose focus is to ensure we are meeting our planned targets and focusing on integrating reconciliation into all practices.

In September we launched our online Patient Info Hub, a selection of patient information available on the hospital website in accessible formats. This included our fact sheets, videos, audio files, as well as information from our partner organisations. All the information housed on the hub was reviewed by consumers before publication.

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Staff training and developmentOngoing training to improve our understanding and awareness of diversity continues with our Disability Awareness and Cultural Awareness sessions, held in October and April. This was complemented by Indigenous Cultural Proficiency Training held for all staff in January, and ongoing opportunities for staff to take part in Guide Dogs Australia’s Dialogue in the Dark, an immersive experience which simulates the reality of those with low or no vision.

In May we proudly joined with other health services across the state launching the Strengthening Hospital’s Response to Family Violence (SHRFV) project. The project involved training that engaged staff to better identify the signs of family violence in patients and colleagues and to improve appropriate referrals to social work. It also included a campaign of posters and key messages about family violence and violence prevention which were on display across both our sites.

Clinical educationAt the beginning of 2018, the Eye and Ear introduced a highly successful virtual reality based simulation training program for ophthalmology trainees to learn specialised micro surgery skills in a safe and controlled environment. In 2019 we offered this training to ophthalmologists across Australia through a three day seminar program. The program titled GENEYE provided virtual reality based training sessions focusing on technical skills, along with sessions on physical and mental wellbeing for surgeons. There were over 85 attendees to the GENEYE program.

We were proud to support the 2nd Australasian Diagnostic Error in Medicine Conference for which our Emergency Department Director, Dr Carmel Crock was the convenor. There was a strong presence from members of the Eye and Ear who gave presentations, ran workshops and engaged in discussions at the three day event.

Our well regarded GP education program hosted 10 practical training sessions in the 2018-19 period for general practitioners on diverse healthcare topics and continued to receive positive feedback from attendees.

RedevelopmentProgress continued on the redevelopment project. Highlights from the year included the fit out of some of the floors under construction in the existing wings, commencement of pilings for the new infill building and the pouring of link balcony slabs. Staff across the hospital have worked diligently to plan for innovative models for efficient and collaborative work in the new spaces and continue to identify ways to improve the provision of clinical services at our temporary site at Eye and Ear on the Park. We also purchased and installed two new sterilizers at this site replacing the out-dated sterilizers at our main hospital. These sterilisers will be relocated to the new building when it is completed.

Electronic Medical Record (EMR)The continuing evolution of the EMR is a high priority for the Board, Executive and clinical staff. We are on track to commence phase 1 of the EMR implementation this year and high level plans are in place for future phases of the project to roll out over the coming years.

Staff recognitionThe Eye and Ear Excellence Awards celebrates those individuals and specialist groups who have contributed to achieving organisational excellence. They acknowledge creative and original thinking that results in positive outcomes for our patients, an improved working environment or improved hospital systems.

Recipients of the 2018 Excellence Awards awarded in November were:

• Board Chair’s Medal – Dr Craig Morgan, Anaesthetist

• Team Excellence Award - Clerical Services Team for Specialist Clinics, Emergency Department, Cochlear and Call Centre

• Aubrey Bowen Medal – Mr Michael Dobson, Otolaryngologist

• Nursing Excellence Award – Evelyn Lee, Short Stay Ward

• Allied Health Excellence Award – Julie Taylor, Orthoptist

• Administrative Excellence Award – Kim Attwood, People and Culture

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We were excited to announce, in February, the successful recipients of the inaugural Early Career Research Fellowships. These Fellowships are open to clinicians working at the Eye and Ear, and aim to support individuals who are in the early stages of their research careers. The recipients were:

• Dr George Kong (Glaucoma Unit)

• Dr Rosie Dawkins (Vitreoretinal Unit)

• Dr Zoe Keon-Cohen (Anaesthetic Department)

AcknowledgementsThe Board Chair and CEO would like to thank all consumers, staff, volunteers, clinicians and Board Directors for their continued engagement with and dedication to the hospital. This commitment ensures that we continue to provide world class care to our patients and the broader Victorian community.

It is with a deep sense of gratitude that we note that CEO Mark Petty has announced his resignation, effective July 2019. The Board is appreciative of the impressive and meaningful contribution that Mark has made over the past four years to support and enhance the delivery of high quality services at the Eye and Ear. Mark’s respectful, collaborative and supportive style will be missed.

During 2018 Mr Robert Briggs stepped down as clinical director of ENT after 7 years. He has made a significant contribution to the hospital’s development and achievements during this time and will be continuing on at the Eye and Ear in his roles as Head of Otology, Medical Director of the Cochlear Implant Clinic and as Clinical Associate Professor in the University of Melbourne Department of Otolaryngology. Dr David Marty has taken on the role as clinical director of ENT.

In 2019 Dr Caroline Clarke stepped down as Executive Director Medical Services/Chief Medical Officer to take on the newly established role of Chief Medical Information Officer. Caroline has been an inspirational leader for medical staff at the Eye and Ear over many years. In her new role she will work to ensure clinicians across the Eye and Ear are fully involved in the planning and rollout of the EMR over coming years.

Thank youThe Eye and Ear is most grateful for the generosity of its supporters. Financial support from our loyal donors and philanthropic Trusts and Foundations help the hospital continue to provide world leading care.

We are also sincerely grateful to our volunteers and community advisory members who offer their time to help others and make the patient experience a more positive and memorable one.

In accordance with the Financial Management Act 1994, we are pleased to present the Report of Operations for The Royal Victorian Eye and Ear Hospital for the year ending 30 June 2019.

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Board of Directors and Board Committees

The Board of Directors is appointed by the Governor in Council on the recommendation of the Victorian Minister for Health and is governed by the principles contained within the Health Services Act 1988 (as amended).

The Board provides governance of The Royal Victorian Eye and Ear Hospital and is responsible for its financial performance, strategic directions, the quality of its health care services and strengthening community involvement through greater partnerships.

The Eye and Ear by-laws enable the Board to delegate certain responsibilities. The by-laws are supported by the delegations of executive and operational responsibility, enabling designated executives and staff to perform their duties through the exercise of specified authority. The Board meets monthly during the year, excluding January.

Dr Sherene Devanesen MBBS; Dip(Obs)RACOG; FRACMA; FACHSM; FIML; FHKCCM; GAICDAppointed 14 April 2015Chair Board of DirectorsMember Finance Committee, Remuneration Committee

Dr Devanesen is the Chief Executive Officer of Yooralla. Before joining Yooralla in January 2014, Dr Devanesen was Chief Executive Officer of Peninsula Health. With over 30 years’ experience in the management of health services and medical administration, her experience has provided her with a strong reputation in consumer consultation and engagement and in achieving quality outcomes for human and community services. Dr Devanesen is a Fellow of the Royal Australasian College of Medical Administrators, a Fellow of the Australasian College of Health Service Management, a Fellow of the Australian Institute of Managers and Leaders, a Fellow of the Hong Kong College of Community Medicine and a Graduate of the Australian Institute of Company Directors.

Mr David Anderson BCOM, MCOM (Finance), GAICDAppointed 26 April 2016Chair Finance CommitteeMember Audit Committee, Remuneration Committee

Mr Anderson brings a wealth of experience in finance and audit. He has held senior finance positions within the Departments of Water Resources Health and Human services within the Victorian Government over the past 20 years and was Executive Director of Finance at Peninsula Health for 16 years to 2018. He has a demonstrated commitment to the wider

community and roles include being a Fellow and recent Board member of Healthcare Financial Management Association (HFMA) and previously Treasurer of the State-wide Autistic Society (Vic).

Mr Simon Brewin MBL, GDHSM, BBus, MAICDAppointed 1 July 2017Chair Audit CommitteeMember Quality & Safety Committee, Remuneration Committee

For over 35 years, Mr Brewin has held senior management roles within the Victorian public health sector with Executive Director appointments at Peninsula Health, Monash Health and Alfred Health. Recent experience has been in the oversight of large scale infrastructure, building projects and facilities management. He has worked with the Victorian Department of Health and Human Services within the Infrastructure, Planning and Delivery Branch in an executive role overseeing the planning and delivery of the governments funded capital programs across public health agencies. Mr Brewin is a past state branch president of the Australasian College of Health Service Management, a Graduate of the Australian Institute of Company Directors, is a past Board Director of Health Purchasing Victoria and is the Deputy Chair of Uniting AgeWell.

Associate Professor Deborah Colville MBBS, FRANZCO, FRACS Grad Dip Epi, MPH Cert Ed & Training, PhD, Dip Management, MAICDAppointed 1 July 2016Chair Quality & Safety CommitteeMember Community Advisory Committee, Remuneration Committee

Associate Professor Colville brings a wealth of clinical experience to the Board, as a practicing ophthalmologist and medical educator. She has published over 40 scientific papers, conducts research at the University of Melbourne’s Northern and Royal Melbourne Hospitals, undertakes regular sessional work as an ophthalmologist at a number of hospitals, has held a number of elected positions at the Royal Australasian College of Surgeons and is currently on the RACS Women in Surgery Section and RANZCO Women in Ophthalmology Executives. She takes a keen interest in the promotion of women in medicine, including networking internationally.

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Ms Linda Hornsey Grad. Dip AB, GAICDAppointed 2 August 2016Chair Community Advisory CommitteeMember Primary Care and Population Health Advisory Committee

Ms Hornsey is a past General Manager for Organisational Transformation at Vision Australia, a provider of services for people who are blind or have low vision. Previously, she was Secretary of the Department of Premier and Cabinet in Tasmania for nine years, has worked as a journalist and political adviser and has many years’ experience in public administration. Ms Hornsey has experience as a director of a number of statutory boards, including Western Health. She is also a member of the Parenting Research Centre Board and its Governance Committee.

Mr Bruce Mildenhall BA, GD Rec, GAICDAppointed 1 July 2018Member Finance Committee, Community Advisory Committee

Bruce has an extensive background in governance at a public sector and community level. He served as the State MP for Footscray for 14 years, including 7 years as Parliamentary Secretary to Premier, and 9 years as a councillor with the City of Footscray. In the health sector he served on the board of a primary health service for more than 20 years, chaired the board of the largest residential aged care service in the western suburbs for 9 years, has led a review of mental health workforce training, has been a board member of the Victorian Health Promotion Foundation and a metropolitan hospital. Beyond these involvements, Bruce is a graduate of the Australian Institute of Company Directors and was a senior manager in the Victorian Public Service before entering parliament.

Dr Karen Owen BA, Dip.Ed, M.Ed, DBA, GAICDAppointed 1 July 2018Member Quality & Safety Committee

Dr Karen Owen has held diverse executive appointments in the health and higher education sectors. Her most recent position was as inaugural CEO of The Royal Australasian College of Medical Administrators (RACMA). She was Chair of the medical speciality colleges CEOs Committee for six years. At RACMA she successfully grew the organisation and positioned the college as a significant member of the Australasian medical speciality colleges and as a global influencer and model in leadership and management education for medical practitioners. She holds a Doctorate of Business Administration and is a Graduate of the Australian Institute of Company Directors.

Ms Llewellyn Prain BA(hons), LLB(hons), GAICDAppointed 1 July 2015Chair Primary Care and Population Health Advisory CommitteeMember Quality & Safety Committee

Ms Prain has a background in law and public policy. She has extensive corporate governance experience and has served as a company director for over ten years. She is currently also a director at Western Water and the Public Transport Ombudsman. She was the first woman to chair the board of the Western Region Health Centre. In 2017 Ms Prain completed the Williamson Community Leadership Program. She is invited to speak by a range of organisations on leadership development and disability inclusion. She is an associate of the Nous Group and provides consulting services in policy and diversity and inclusion. Ms Prain developed a vision impairment in 2014 and brings a strong consumer focus to the board of the hospital.

Mr Bruce Ryan BSc (maj. Computer Science and Statistics)Appointed 1 July 2017Member Audit Committee, Finance Committee

Mr Ryan is the Chief Information Officer at Yooralla. He has extensive Information and Communications Technology (ICT) management expertise within the Victorian public health sector and within other Victorian government settings. He has worked with the Department of Health and Human Services to assist with delivery of large scale ICT enabled projects, and worked closely with Eastern Health during the redevelopment of the Box Hill Hospital, and commissioning of an advanced Electronic Medical Record there.

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Board Committees

Audit CommitteeThe Audit Committee membership comprises the following non-executive directors: Mr Simon Brewin (Chair), Mr David Anderson and Mr Bruce Ryan.

The Audit Committee meets at least four times per year and assists the Board in monitoring compliance with laws, regulations, standards and internal controls. Key responsibilities for the Audit Committee include monitoring the hospital’s strategic and operational risks, developing the hospital’s strategic internal audit plan, oversight of the Internal Audit Program, review of the Draft Annual Accounts and review of the relevant risk policies and procedures. All the Audit Committee members are independent of Management.

Finance CommitteeThe Finance Committee membership comprises the following non-executive directors: Mr David Anderson (Chair), Dr Sherene Devanesen, Mr Bruce Mildenhall and Mr Bruce Ryan. Advisor: Mr Grant Cashin.

The Finance Committee meets at least seven times per year and assists the Board to fulfil its duties relating to the effective financial management of the Eye and Ear. Key responsibilities for the Finance Committee include oversight of the hospital’s annual operating and capital budget, review of the financial management reports, advising the Board on the financial implications associated with major projects and reviewing the relevant financial policies and procedures. All the Finance Committee members are independent of management.

Quality & Safety CommitteeThe Quality & Safety Committee membership comprises the following non-executive directors: Associate Professor Deborah Colville (Chair), Mr Simon Brewin, Dr Karen Owen and Ms Llewellyn Prain. Consumer member: Mr Jonathan Mortimer.

The Quality & Safety Committee meets quarterly and provides leadership and strategic direction on issues regarding the quality of services at the Eye and Ear. The Committee’s focus is the delivery of the highest level of quality and safety to patients, family and staff and to ensure that all relevant standards are met. Innovation to improve quality and safety systems is a priority. The committee works in conjunction with the Community Advisory Committee to develop the annual Quality Account which highlights patient and family-centred care service improvements. All the Quality & Safety Committee members are independent of management.

Remuneration CommitteeThe Remuneration Committee membership comprises the following non-executive directors: Dr Sherene Devanesen (Chair), Mr David Anderson, Mr Simon Brewin and Associate Professor Deborah Colville.

The Remuneration Committee meets at least annually and makes assessments and recommendations to the Board concerning the performance against the agreed Performance Plan, remuneration and bonus awards (if applicable) and terms and conditions of employment for the Chief Executive Officer. It also provides oversight of the remuneration and bonus arrangements (if applicable) of the Executive Directors of the hospital. All the Remuneration Committee members are independent of management.

Community Advisory CommitteeThe Community Advisory Committee membership includes the following non-executive directors: Ms Linda Hornsey (Chair), Associate Professor Deborah Colville and Mr Bruce Mildenhall.

The membership also comprises at least 8 members nominated by the Committee Chair and approved by the Board to represent the views of the communities served by the Eye and Ear. The Community Advisory Committee advises the Board on consumer and community participation in the development and delivery of services. The committee meets bi-monthly. All the Community Advisory Committee members are independent of management.

Primary Care and Population Health Advisory CommitteeThe Primary Care and Population Health Advisory Committee membership includes the following non-executive directors: Ms Llewellyn Prain (Chair) and Ms Linda Hornsey.

The Primary Care and Population Health Advisory Committee provides advice to the Board on working with primary health services and responding to population health issues. The Committee is currently focused on the Eye and Ear’s Aboriginal health strategy and closing the gap. The committee meets at least twice a year. All the Primary Care and Population Health Advisory Committee members are independent of management.

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Executive Management

Chief Executive Officer (CEO)

Mark Petty MHA, GDip Comp Sci, BApp Sci Adv Nsg, FAICD

The Chief Executive Officer is accountable to the Board for executive leadership and management of operational, policy, and strategic goals agreed with the Board and in accordance with the funding, planning and regulatory framework of the Victorian Government Department of Health and Human Services.

Executive Director Medical Services and Chief Medical Officer

Dr Caroline Clarke MD, FRACP, MRCP, FRACMA(1 July 2018 to 15 February 2019)Dr Jason Goh MBBS, BioMedSc, MHA, FRACMA, MAICD(Acting 15 February 2019 to 16 June 2019)Dr Sean Jespersen MB ChB, M Med Psych, FRANZCP, FRACMA, FCHSM(Commenced 24 June 2019)

The Executive Director, Medical Services and Chief Medical Officer (CMO) has executive responsibility for the medical workforce, medical training and education, library services and the research strategy of the hospital. In addition, the CMO is responsible for the leadership of clinical governance and clinical improvement initiatives. The role is also responsible for providing leadership and direction to the introduction of the Electronic Medical Record, and for management of Health Information Services.

Clinical Director Ophthalmology Services

Dr Mark McCombe MBBS, FRANZCO

The Clinical Director Ophthalmology Services is responsible for ophthalmic medical leadership. The role advises on strategy and models of care in ophthalmology that are sustainable and lead to excellence.

Executive Director Chief Operating Officer and Chief Nursing Officer

Ms Jenni Bliss General Nursing, Grad Dip, Advanced Clinical Practice Paediatrics and Professional Certificate in Health Systems Management, ACHS Executive Leadership Program

The Chief Operating Officer is responsible for overseeing all clinical operations for the organisation including surgical and inpatient services, the Emergency Department, Specialist Clinics and Ambulatory Services. It includes the management of pharmacy services, the Cochlear Implant program and the emergency management for both sites. As Chief Nursing Officer, the role has professional responsibility and leadership for all nursing staff, the clinical competence framework and nurse education.

Clinical Director ENT Services

Dr David Marty MBBS, FRACS

The Clinical Director ENT Services provides clinical and medical leadership, advice on models of care to support clinical excellence in ear, nose and throat and surgical support services.

Executive Director Redevelopment, Planning and Infrastructure

Mr Ian Leong Bach Bldg (QS) (Hons), Grad Dip Comp Sc, MBA

The Executive Director Redevelopment, Planning and Infrastructure has overarching responsibility for capital redevelopment of the Eye and Ear, Business and Strategic Planning incorporating future health service delivery strategy, facility maintenance and security services. The role has overview of the Eye and Ear on the Park site/services, oversight of the five year redevelopment program including the model of care and physical works associated with the redevelopment and service planning.

Executive Director Finance & Corporate Services

Mr Danny Mennuni B.Bus, CPA

The Executive Director Finance and Corporate Services is the Chief Financial Officer and the hospital’s Chief Procurement Officer. He is responsible for providing leadership in financial management, reporting and controls. The position is also responsible for leading and managing efficient and effective information technology, decision support, contracts and procurement services.

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Organisational Chart

Note: Grey box denotes direct reporting line to Executive Director

Board

Chief Executive Officer

Mr Mark Petty

Clinical Director Ophthalmology

Dr Mark McCombe

Clinical Director ENT

Mr David Marty

Board Secretary Peter Hudson

General Counsel Andrew Jaworski

Marketing & Communications Nicola Edwards

Philanthrophy & Fundraising

Deborah Cutts

People & Culture Loretta Sheales

ED Redevelopment, Planning &

InrastructureMr Ian Leong

Capital Planning and Redevelopment

Facilities Management

Asset Relocation

Engineering

Security

Planning and Patient Experience

Aboriginal Health

GP Liaison

Consumer Liaison Officer

Community Engagement and Participation &

Volunteers

Health Service Planning

ED Medical Services / CMO

Assoc. Professor Sean Jespersen

Clinical Improvement

Quality and Risk

Clinical Informatics

Health Information Services

Medical Workforce

Research

Anaesthetics

Library

EMR Project

ED Finance & Corporate

ServicesMr Danny Mennuni

Contract Management &

Procurement

Finance

ICT

Decision Support Unit

Chief Operations Officer /

CNOMs Jenni Bliss

Cochlear & Balance Services

Director Surgical Services

Nurse education | Infection

Control | Diabetes Coordinator

Emergency Department

Pharmacy

Emergency Management

Ambulatory Services

General Audiology & BDAS

Cochlear Implant Clinic

After Hours Hospital Coordinators

Inpatient Services: 8th Floor

Short Stay Unit

Perioperative Services:

Operating Theatre Services

Surgical Processing Services

Day Surgery Facility

Preadmission Surgical

Booking Unit

Diagnostic Eye Services

Social Work \ Transport

Outpatient Bookings Unit

Specialists Clinics

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Donors and Supporters

The Eye and Ear is appreciative of the continued support of our donors, ambassadors and volunteers.

The financial donations and funding we receive enables us to improve our services to patients through the purchase of state-of-the-art equipment, new treatment options and continued research into new diagnostic techniques and treatments.

We also gratefully acknowledge our supporters who have expressed their intent to leave a bequest to the Eye and Ear. This helps us continue to improve care and treatment for those living with vision and hearing loss in the future.

PatronMr Anthony Howard QC (11 August 2015 - present)

Peter Howson Deafness Fellowship 2018-2019A joint venture between the Eye and Ear and the Deafness Foundation funds a two year Fellowship in the field of hearing science.

Dr Caitlin Barr (BSc, MClinAud, PhD) was appointed as the fourth Peter Howson Deafness Fellow in 2018 to conduct the research project titled ‘Who is talking, who is listening, and who is hearing? Optimising hearing help-seeking pathways starting in General Practitioner’s office’

Zoran Georgievski Memorial Research Scholarship 2019-2022In 2012, a Scholarship in memory of the late Associate Professor Zoran Georgievski (Manager Diagnostic Eye Services) was established in conjunction with the LaTrobe University.

Ms Emilie Rohan is the current recipient commencing in 2019.

Project Title: ‘Identifying predictors of progression from early to advanced diabetic retinopathy.’

Our Major Donors, Bequestors, Corporate and Community Supporters

Trusts and Foundations

Collier Charitable FundAnnie Danks TrustEldon and Anne Foote TrustLord Mayor’s Charitable FoundationThe Louis & Lesley Nelken Trust FundJohn T Reid Charitable TrustsRE Ross TrustJoe White BequestTrusts and Foundations managed by PerpetualThe John and Thirza Daley Charitable TrustH & L Hecht TrustThe Steele Family Charitable Trust

Bequests

Estate of Ernest Finlay BurnsThe Penelope Foster FoundationEstate of Marjorie HudsonEstate of Kevin John HughesEstate of Friedrich HuschkaEstate of John Grant McCoyEstate of Agnes Scott MuirEstate of Anne MurrayEstate of Mrs Dorothy SchwabEstate of Barry ShackletonEstate of Annie Frances Margaret Mary Wright

Estates

The Orloff Family Charitable TrustThe Elizabeth & Alexander Reddan Memorial FoundationThe Harry Yoffa Charitable Bequest

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Estates managed by Perpetual

Estate of John Alexander AndersonEstate of Alfred H W DehnertThe William and Mary Ievers & Sons Maintenance FundThe Joseph & Kate Levi Charitable TrustEstate of Martha Miranda LivingstoneThe Rudolph Hally & Pia Martin Memorial Trust

Estates managed by Equity Trustees

Estate of Dr Mark AshkenasyThe Erica Cromwell TrustWilliam Hall Russell Trust FundThe Joseph Kronheimer Charitable FundGeorge T & Lockyer Potter TrustEstate of Heather Sybil SmithBetty Brenda Spinks Charitable TrustEliza Wallis Charitable TrustErnest and Letitia Wears Memorial TrustEstate of John F Wright

Estates managed by State Trustees (S.T.A.F.)

Estate of Bruce L PowellEstate of Jessie Ross

Major Donors

Mr Salah AhmadMs Dianne BridleMr Geoffrey Carroll in memory of the late Mrs Jillian CarrollMr Tony CawthorneMrs Ann ChlebnikowskiMs Kaye ClearyMrs Siew CleelandMr John CookMrs Beryl Coombs

Ms Ruth Crutch

Mrs Elizabeth DonovanMr Trevor EdwardsMr Byron GeorgeMr Brian GoddardMr & Mrs Ken and Margaret GrendaMr Richard HarbigMr Michael HalprinMr Ramiz KarakayaMr William KerrMrs Catherine KingMr Brian LotonMr Graham McKnightMiss Jules McLean in memory of the late Mr Douglas McLeanMr Keith & Mrs Jeanne McRaeMr J SmithMr Harry SoultanidisMrs Marjorie ToddMr Arthur TsilibakisMr & Mrs David & Cynthia WebbDr Robert WebbDonation in memory of the late Mrs Thi Anh LuuFive anonymous donors

Community Supporters

Ballarat Combined Charities Card ShopFrankston FriendsMitcham Uniting ChurchLions Club of SpeedRitchie’sUniting Church in AustraliaZouki Catering

Corporate Sponsors

Alcon Laboratories (Australia) Pty LtdOracle Australia Matching Gift Program

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VolunteersThe hospital is home to a dedicated and growing group of volunteers who assist in a range of roles, offer a welcoming smile and a bit of extra help to reassure patients in need. With our hospital undergoing a redevelopment and having to run the majority of our specialist clinics from our new temporary site (Eye and Ear on the Park), the volunteer role is even more vital and appreciated by patients, visitors and staff. This year, we welcomed an additional 20 volunteers to the Eye and Ear team.

In the past year, our volunteers have given close to 7,000 hours of their time and provided direct assistance to over 40,000 patients. The Concierge volunteers, at both the main hospital and at Eye and Ear on the Park, provide an important personal touch to our patients’ experience as they help patients and their carers through their journey from arrival at our front door to arranging a taxi ride home. Volunteers also help with administrative tasks, and continue to support patients in our Specialist Clinics and Emergency Department to help patients and visitors have a positive experience at our hospital. From 2018, we initiated an early morning volunteer support role in our Day Surgery Department. While at the hospital our friendly volunteers also assist patients to complete Patient Experience Surveys helping us to continue improving our services.

We would like to take the opportunity to thank our Auxiliary members who have a long history with the hospital and are often one of the first people in the door in the morning, continuing to raise vital funds for the hospital. We pay special tribute to one of our long serving volunteer auxiliaries Jean Hamley who passed away late last year. Jean volunteered her time coordinating the Eye and Ear Opportunity Shop for forty years and also provided additional weekly support to the Speech Therapy Department. We also appreciate the long standing friendship and support from our Frankston Friend Auxiliaries.

We sincerely thank all our volunteers for their hard work and continued commitment.

Consumer RepresentativesThe hospital is also home to a dedicated group of consumer representatives who partner with us to help us improve our services for our patients, their families and carers. Consumer representatives can be involved in a number of ways, they participate in Committees and Working groups, attend focus group activities, review patient information developed by the hospital and share their stories in our publications.

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Key Financial and Service Performance Reporting

People and cultureThe Strategic Workforce Plan 2017– 19 informs our actions to ensure we have a competent workforce equipped to meet the ever-increasing demand on our services. The plan aims to safeguard our future by identifying the needs of our future workforce and to pave the way to achieve this. The Eye and Ear promotes workplace behaviours that ensure we treat each other with respect and that we adopt fair and transparent processes based on the principles of natural justice and teamwork. We promote positive behaviours aligned with the Code of Conduct. The organisational values of integrity, teamwork, care and excellence are embedded in daily activities, decision making and the way we work together. We measure the uptake of our values as part of our Reward and Recognition Program and in our People Matter Survey.

Employee Culture and EngagementThe People Matter Survey results play an important role in delivering our people strategies. The 2018 survey results showed a continuing positive trend including an increase in employee engagement compared with the previous year and job satisfaction, leading change, patient safety and observed a reduction in the experiences of bullying. Overall, the results were very positive. Compared to other Victorian Health Services we benchmarked better or the same for all core items for the second consecutive year. Our highest scoring questions relative to our peers were related to: providing guidance and training to new employees, having a low tolerance to bullying and that work performance is assessed against clear criteria.

Health and wellbeing initiativesThe health of our workforce remains a priority for the Eye and Ear. We commenced our third year of the wellness@work program with priority areas: mental health at work; physical activity; nutrition; quit smoking; safe alcohol use; and financial health. We continued to focus on education and awareness activities and offered roving massages for staff, staff benefit events, promoting healthy eating and being more active and mental health in the workplace awareness session

We aim to enhance staff wellbeing for many reasons including: improving resilience, quality of work, building morale and employee engagement. We also recognise that employee health and wellbeing contributes to a higher level of healthcare.

Staff participated in a People and Work survey which is a psychosocial risk assessment of hazards in the workplace. The purpose of the survey was to determine the percentage of employees experiencing high job demands and low job resources, the

prevalence of bullying, (both experienced and witnessed) and the prevalence of job burn-out, stress related absenteeism and job dissatisfaction. The results will be collated with the People Matter Survey results and other data to assist with future planning of staff mental health and wellbeing initiatives.

Merit and equity principlesThe Eye and Ear is an equal opportunity employer and is committed to providing its employees a work environment which is free of harassment or discrimination together with an environment that promotes wellbeing. Our employees show their commitment to our values by upholding appropriate behaviours and adopting fair and equitable employment principles to their daily decisions. We aim to be viewed as an employer of choice, and we actively support and engage workforce diversity. We maintain policy and procedures that support equity and diversity in employment and provide managers information and support promoting inclusive recruitment and retention practice. Valuing diversity allows the organisation to provide patient centred care to a wide range of patients. It also engages employees by celebrating our differences as a strength to harness these characteristics to achieve organisational and individual benefit.

Recruiting and onboarding staffIn 2018–19 the Eye and Ear workforce comprised over 900 staff. We recruited approximately 129 new staff, all of whom attended an orientation program. Our turnover rate was 8.1%, which is slightly lower than industry average.

The Eye and Ear appreciates that its employees are its most important asset and a supportive, informative onboarding process is critical to ensuring when staff begin at the Eye and Ear they understand the operational and clinical expectations in order effectively contribute to the organisation. We have continued to improve our online resources to be more interactive and educational. We evaluate our general orientation, on boarding and induction systems to ensure they meet our expectations.

Pre-employment safety screeningThe organisation continues to apply thorough credentialing and pre-employment verification checks to ensure we sustain safety and quality of health care provision. Applicable clinical staff are required to hold and maintain current registration with the relevant National Board in conjunction with the Australian Health Practitioner Regulation Agency (AHPRA) or equivalent. All staff are required to maintain a satisfactory Criminal Record Check and clinical staff are required to hold a valid Working With Children Check.

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Aboriginal Employment PlanThe Aboriginal Employment Plan is designed to provide practical steps to provide a culturally inclusive workplace for Aboriginal employees, increase Aboriginal cultural awareness of all staff and achieve increased Aboriginal workforce participation. As a member of the Wandeat Bangoongagat eLearning Project Group, the release this year of an eLearning Aboriginal Cultural Awareness training will provide strong foundations and greater cultural awareness amongst staff. Updates to the recruitment system allow for a more culturally appropriate recruitment process for Aboriginal and Torres Strait Islander applicants.

Employee recognition programsThe Eye and Ear recognises that its future success continues to depend upon the capacity of our staff and is committed to supporting our staff with a fair and equitable reward and recognition system. We aim to create a climate for performance excellence at every level for individual and team performance.

Our renewed Reward and Recognition Program is in its third year of the revised format. The program was streamlined to provide one pathway for nominations annually.

The annual Eye and Ear Excellence Awards recognise specific individuals and teams that have contributed to achieving organisational excellence. There are six award categories and each award acknowledges creative and original thinking that results in positive outcomes for our patients, an improved working environment and/or improved hospital systems.

The winners of our 2018 Excellence Awards are listed in our Chair and CEO Report on page 3. The following were the recipients of the Values Award in 2019:

• Nursing Education Team

• Eloise Leeson-Leahy, Clerk Outpatient Booking Unit

Building a capable workforceWe are three years into our journey of developing leadership at different levels. The need to optimise clinical leadership potential across the professions is of critical importance to the delivery of excellence and improved patient outcomes. The Eye and Ear Leadership Development Pathway includes a four tiered development pathway, providing opportunities for emerging leaders, operational managers and senior leaders to develop and enhance leadership and change capability.

Our Leading with Impact programs are mapped to our Leadership and Change Capabilities, individual needs and organisational needs. Our programs are designed to include formal learning time through

interactive workshops and also recognise the important role the manager has in reinforcing leadership development on the job.

The 2019 Leading with Impact cohort commenced with further reinforcing leadership development programs for past participants. The 2017 post 12 month program impact evaluation results were positive in our five key areas of behaviour change required to be an effective leader. The results showed 100% of participants reported the training was relevant and 95% agreed it was personally motivating and created a higher standard of leadership. Participant’s managers also said it increased the quality of leaders with 78% responding that it the created a higher standard of leadership.

We have continued to improve the quality of our performance and development discussions by amending and simplifying the framework where possible on our online ePerformance system. These critical discussions ensure performance feedback is provided and work and personal development goals are established for the future. This process also provides for the review of: individual clinical scope of practice; mandatory training compliance; expectations about quality and safety responsibilities and; upward feedback and feedback on quality and safety processes.

A centralised calendar of staff development opportunities continues to offer all staff professional development workshops in the areas of influencing and negotiating, resilience, and providing and receiving feedback.

Our in-house MyLearning portal continues to categorise training requirements by role, department and profession to ensure staff have access to maintain the knowledge and skills to perform their role safely.

Employee Assistance Program (EAP)Counselling services, provided by AccessEAP continues to be utilised at a consistent rate of about 3.9%. The Employee Assistance Program is a confidential outsourced counselling service available to staff, their family and household members. The service provides wellness at work education and awareness programs, financial coaching, domestic and family violence support, nutritional and legal consultation aimed to assist personal or work related issues that have an impact on wellbeing and quality of life. The service also offers managers support and post incident debriefing in the workplace.

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Employee RelationsIn 2018 there were several enterprise agreements implemented. This included doctors in training and medical specialists. The Eye and Ear formed an Agreement Implementation Committee with specialists to ensure ongoing monitoring and assessment of the agreement. For existing enterprise agreements 2018 was a year of review and changes to classification structures. This process impacted security, interpreters, instrument and theatre technicians and provided opportunities for career progression. There was zero time lost through industrial disputes.

People and Culture developed and implemented an e-learning course ‘Promoting Appropriate Workplace Behaviours’. Available to all staff, the course is designed to provide all staff with an understanding of appropriate behaviour and emphasises the Eye and Ear policies and procedures in place to prevent inappropriate behaviour including bullying, discrimination and harassment.

Occupational Health and SafetyThe Eye and Ear is committed to providing a safe and healthy workplace for staff, contractors, volunteers, patients and visitors. The Health, Safety and Environment Commitment Statement and Executive Committee take action to:

• Enable a positive OHS culture

• Provide effective OHS leadership

• Continuously improve OHS performance

• Ensure effective management processes for the identification, analysis, assessment, treatment and ongoing monitoring of OHS risks.

The following table outlines the Eye and Ear’s OHS performance:

Eye And Ear Staff 2016-17 2017-18 2018-19

Incidents/hazards per 100 full-time equivalent staff members*

40 30 50

Lost time standard claims per 100 full-time equivalent staff members

0.96 0.76 0.92

WorkCoverThe Eye and Ear’s WorkCover performance improved in 2018-19 due to proactive early intervention and injury management programs. The emphasis was on assisting staff prior to the issues escalating and eliminating hazards that were identified by staff during our Planned Safety Walks. Staff injuries reduced and the severity of injuries is lower than the industry and improved on previous years. This has resulted in our Employer Performance Rating (EPR) for 2018-19 being 0.87%, which is 13% better than industry.

Our non-work related injury management program also resulted in assisting staff return or remain at work which creates great benefit for individual staff and their work teams.

To minimise risk and promote staff safety, the following programs, activities and key messages were provided:

• zero tolerance for inappropriate behaviour at work including bullying, harassment and occupational violence and aggression

• raising awareness of appropriate behaviours and encouraging staff to report concerns through online education and staff forums

• ensuring People and Culture staff are able to respond to complaints and are adequately skilled in conducting workplace investigations

• reporting incidents, hazards and near misses to enable the Eye and Ear to address individual issues and collect data for trend analysis and development of risk controls, and

• the importance of appropriate consultation between staff, managers and People and Culture before implementing new work practices or equipment.

In 2018-19, the Health, Safety and Environment Committee met regularly to discuss and address safety issues. Manual handling remains a focus for the Eye and Ear with training for staff and purchase of equipment. The Laser and Radiation Safety and Emergency Management Committees also provide staff and safety representatives to be involved in health and safety decisions through consultation. OHS training provided included: bullying, discrimination and harassment awareness and prevention training for all managers; occupational violence and aggression management for clinical and front line staff; manual handling ‘train the trainer’ training.

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Occupational ViolenceOccupational violence is any incident where an employee is abused, threatened or assaulted in circumstances arising out of, or in the course of their employment. The Health, Safety and Environment Committee have oversight of occupational violence and aggression issues across the organisation and have developed a plan to address specific occupational violence needs and promote staff safety.

The Eye and Ear has implemented a number of initiatives based on the Occupational Violence and Aggression Framework. This has led to increased reporting of instances of occupational violence and aggression via VHIMS Riskman.

The Eye and Ear can report the following occupational violence statistics for 2018-19:

Occupational violence statistics

WorkCover accepted claims with an occupational violence per 100 FTE

0.36859

Number of accepted WorkCover claims with lost time injury with an occupational violence cause per 1,000,000 hours worked

2.22

Number of occupational violence incidents reported

81

Number of occupational violence incidents reported per 100 FTE

14.9

Percentage of occupational violence incidents resulting in a staff injury, illness or condition

7.4%

Workforce data

Hospitals Labour Category

June 2018 Current

Month FTE

June 2019 Current

Month FTEJune 2018

YTD FTEJune 2019

YTD FTE

Nursing 166 169 162 165

Administration and Clerical 158 161 156 160

Medical Support 56 54 53 57

Hotel and Allied Services 16 16 15 16

Medical Officers 6 6 6 6

Hospital Medical Officers 54 65 60 60

Sessional Clinicians 39 39 37 39

Ancillary Staff (Allied Health) 38 40 40 40

Total 533 550 529 543

The FTE figures in the table above exclude overtime. These do not include contracted staff (for example agency staff or fee-for-service visiting medical officers) who are not regarded as employees for this purpose.

Work Cover Claims

Paid Amount Estimate (SCE) Incurred Cost Premium (Capped) Cost.

All Claims Active Claims

2014-15 2015-16 2016-17 2017-18 2018-19

CL

AIM

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0 0

2 $100,000

6

4 $200,000

8

10

$300,000

$400,000

$500,000

CL

AIM

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Financial Information2019

$,0002018

$,0002017

$,0002016

$,0002015

$,000

Operating Result 148 272 130 332 803

Total Revenue 147,407 158,047 131,558 120,679 122,986

Total Expense (128,890) (122,238) (113,380) (104,398) (99,892)

Net Result from Transactions 18,517 35,809 18,178 16,281 23,094

Total Other Economic Flows (4,088) 639 474 (246) (746)

Net Result 14,429 36,448 18,652 16,035 22,348

Total Assets 326,678 332,022 285,370 251,205 229,302

Total Liabilities (36,876) (34,050) (25,612) (21,576) (20,209)

Net Assets / Total Equity 289,802 297,972 259,758 229,629 209,093

2019 $,000

2018 $,000

2017 $,000

2016 $,000

2015 $,000

Net Operating Result 148 272 130 332 803

Capital and Specific Items:

Capital Purpose Income 32,210 48,634 30,023 25,818 31,053

Specific Income - 892 - - -

Assets Provided Free of Charge - (101) (203) - -

Expenditure for Capital Purposes (21) (181) (706) (2) (237)

Depreciation and Amortisation (13,261) (13,707) (11,066) (9,867) (8,525)

Finance Costs (559) - - - -

Net Result from Transactions 18,517 35,809 18,178 16,281 23,094

Significant Changes in Financial Position During 2018-19There were no significant changes in the financial position during 2018-19.

Summary of Major Changes or Factors which have Affected the Achievement of Operational Objectives for the YearThere were no major changes or factors that affected the achievement of operational objectives for 2018-19.

Events Subsequent to Balance Date, which may have a Significant Effect on the Operations of the Entity in Subsequent YearsThere have been no significant events subsequent to balance date affecting the operations of the hospital.

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Consultancies information FRD 11(e) Details of consultancies (under $10,000)In 2018-19, there were no consultancies where the total fees payable to the consultants were less than $10,000.

Details of consultancies (valued at $10,000 or greater)In 2018-19, there were two consultancies where the total fees payable to the consultants were $10,000 or greater. The total expenditure incurred during 2018-19 in relation to these consultancies is $61,815 (excluding GST). Details of individual consultancies can be viewed at www.eyeandear.org.au.

Consultant Purpose of Consultancy Start Date End Date

Total Approved Project Fee

(excluding GST)

Expenditure 2018-19

(excluding GST)

Future Expenditure (excluding GST)

Analytics 8 Limited Partnership

To perform an assessment of the existing Business Intelligence solution and provide a view of target state

June 2019

June 2019

$19,600 $19,600 $0

PricewaterhouseCoopers Consulting (Australia) Pty Ltd

To define the target state architecture associated with the electronic medical record

February 2019

March 2019

$42,215 $42,215 $0

Information and communication technology (ICT) expenditure

Business As Usual (BAU) ICT Expenditure

Non Business As Usual (non-BAU) ICT expenditure

Total (excluding GST) Total=Operational expenditure and Capital Expenditure)(a+b) (excluding GST)

Operational expenditure

(excluding GST) (a)

Capital expenditure

(excluding GST)(b)

$3.54 million $1.143 million $0 million $1.143 million

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Disclosures Required Under Legislation

Freedom of Information Act 1982The Victorian Freedom of Information (FOI) Act 1982 provides members of the public with the right to apply, in writing, to the Eye and Ear for access to information held by the hospital. The hospital provides an annual report of all FOI requests to the Victorian Department of Justice.

The cost to make a FOI request in the 2018-19 financial year was as follows:Application fee $28.90

Search and retrieval fee $5.00

Photocopying/printing (black & white)

$0.20 per page

Photographs $5.00

Supervised viewing $27.00 per ¼ hour ($85.20max)

Freedom of Information Applications 2018–19 Requestors

No. of requests

Total requests 158 General Public 39

Fully granted 158Lawyers & insurance companies 119

Completed 120 Total 158

The requirements for making a request are:

• it should be in writing

• it should identify as clearly as possible which document is being requested

• it should be accompanied by the appropriate application fee.

The FOI officer for the Eye and Ear is the Executive Director Medical Services/Chief Medical Officer.

Building Act 1993During the financial year, it has been practice to obtain building permits for building projects and certificates of occupancy or certificates of final inspection for all completed projects. Registered building practitioners have been engaged for all building projects, new or major refurbishments. To ensure buildings are maintained in a safe and functional condition, ongoing maintenance programs are in place. There is a requirement under the Building Act 1993 (Building Regulations 2006, rr. 1209, 1215) for the hospital to establish comprehensive management of the Essential Safety Measures (ESM). In 2018, The Royal Victorian Eye and Ear Hospital at 32 Gisborne St East Melbourne achieved 100% compliance with mandatory ESM inspections, testing, maintenance and documentation in relation to building safety. The hospital has established a comprehensive management of the Essential Safety Measures

(ESM). All ESM are annually audited and identified on the Certificate of Occupancy issued by the building surveyor with each ESM maintained as per certified maintenance agreements at the specified time intervals. The ESM compliance certificates can be located on display at the main entrance of the hospital.

PrivacyPrivacy is an important part of the culture at the Eye and Ear. Since the Health Records Act 2001 became legally binding in 2002, the hospital has aimed to ensure all staff are aware of the Act and its implications in the workplace. The hospital also aims to ensure compliance with the Privacy and Data Protection Act 2014.

The Eye and Ear’s Privacy Officer is the Executive Director Medical Services/Chief Medical Officer.

Protected Disclosure Act 2012 (Vic)The Eye and Ear has policies in place that includes the mandatory notification requirements of suspected corruption under the Directions made pursuant to section 57A of the Independent Broad-based Anti-corruption Commission Act 2011 and the requirements under the Protected Disclosure (IBAC) Act 2012. This includes the obligation to report to IBAC any suspected corrupt conduct occurring at the Eye and Ear and suspected corrupt conduct occurring in other organisations connected with the Eye and Ear. Under the Protected Disclosures Act 2012 (Vic) (the Act), complaints about certain serious misconduct or corruption involving a public health service in Victoria should be made directly to IBAC in order to remain protected under the Act. The Eye and Ear encourages individuals to make any disclosures which are protected disclosures within the meaning of the Act to IBAC. The hospital also has a range of procedures in place to protect persons making disclosures and to ensure, where possible, no detrimental action is taken against anyone who makes or is involved in the investigation of a protected disclosure, including an overarching procedure available through the hospital’s website. The hospital is not an entity that can receive protected disclosures under the Act.

DataVIC Access PolicyMaking datasets freely available to the public is the State’s default position and where possible agencies must make datasets available with minimum restrictions, including the proactive removal of cost barriers. The Eye and Ear complies with this policy in all relevant business activities.

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National Competition PolicyIn accordance with the Competition Principles Agreement (CPA), Victoria is obliged to apply competitive neutrality policy and principles to all significant business activities undertaken by government agencies and local authorities. The Victorian Government’s competitive neutrality policy commits public health services to apply this policy to all dealings. This includes the adoption of pricing principles to take account of the full cost attribution for net competitive advantages conferred by government ownership. The policy gives direction that where the government’s business activities involve it in competition with private sector business activities, the net advantages that accrue to a government business are offset.

Competitive Neutrality Policy Victoria 2000 sets out the Victorian approach to competitive neutrality. The Eye and Ear complies with this policy in all relevant business activities.

Carers Recognition Act 2012The Carers Recognition Act 2012 recognises, promotes and values the role of carers. The Eye and Ear understands the different needs of carers and the value they provide to the community. In our commitment to a model of patient and family-centred care, we recognise and involve carers at a governance level in the development, delivery and evaluation of our services, and at an individual patient care level to support discussions and decision making between patients and staff, with the patient’s consent.

The Safe Patient Care ActThe Eye and Ear takes all practicable measures to ensure compliance with the Safe Patient Care Act 2015. The hospital has no matters to report in relation to its obligations under section 40 of the Act.

Environmental performanceThe Eye and Ear Hospital has a commitment to environmental sustainability. As we continue through our redevelopment phase, consideration is given to our energy and water consumption, as well as improving the management of waste and hazardous materials. We aim to achieve this by using resources efficiently, maximising recycling opportunities and minimising the amount of waste going to landfill.

• Clinical and related waste has increased by 4% in the current year, this is consistent with hospital activity (i.e. outpatient attendances as well as surgical and inpatient activity). One of the major challenges facing health services for now and into the future is the increased usage of single use items to reduce risks of infection. A project of reviewing this trend against national standards is currently in progress.

• Our staff are continuously looking for opportunities for recycling; these have included bottle caps to a 3D filament project, Theatre Wrap and working with the Vinyl council to recycle PVC tubing.

Disability Action PlanThe Eye and Ear is committed to providing an inclusive and accessible environment for staff, patients and visitors to the hospital, regardless of ability or capacity. The Partnering with Consumers and Community Plan incorporates the Disability Action Plan (DAP) and includes a governance model to ensure organisation wide engagement in the key deliverables and objectives of the plan.

The DAP reflects the vision and strategic priorities of the Eye and Ear and is aligned with the Victorian Department of Health and Human Services Disability Action Plan 2018-2020. Major DAP achievements implemented in 2018-19 include engaging consumers to inform improvements to our signage and to our hospital’s physical environment to enable people with a disability to better access our services, and input into strategic and operational planning processes.

Car parking feesThe Eye and Ear complies with the DHHS hospital circular on car parking fees and details of car parking fees and concession benefits can be viewed at: www.eyeandear.org.au/page/News_and_Events/Latest_News/Car_parking_for_Eye_and_Ear_patients_and_visitors/

Victorian Industry Participation Policy Disclosure (now known as Local Jobs First Act 2003)The Eye and Ear complies with the policy on Local Jobs First Act 2003. The Act requires, wherever possible, local industry participation, taking into consideration the principle of value for money and transparent tendering processes. No contracts commenced in 2018-19 for which compliance with this Act was necessary.

Disclosure of Ex-Gratia PaymentsThe Eye and Ear made no ex-gratia payments for the year ending 30 June 2019.

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Attestations

Financial Management Compliance AttestationI Simon Brewin, on behalf of the Responsible Body, certify that The Royal Victorian Eye and Ear Hospital has complied with the applicable Standing Directions under the Financial Management Act 1994 and Instructions.

Mr Simon BrewinChair, Audit Committee20 August 2019

Responsible Bodies DeclarationIn accordance with the Financial Management Act 1994, I am pleased to present the Report of Operations for The Royal Victorian Eye and Ear Hospital for the year ending 30 June 2019.

Dr Sherene DevanesenChair, Board of Directors20 August 2019

Data IntegrityI, Jenni Bliss certify that The Royal Victorian Eye and Ear Hospital has put in place appropriate internal controls and processes to ensure that reported data accurately reflects actual performance The Royal Victorian Eye and Ear Hospital has critically reviewed these controls and processes during the year.

Jenni BlissInterim Accountable OfficerThe Royal Victorian Eye and Ear Hospital20 August 2019

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Conflict of InterestI, Jenni Bliss, certify that The Royal Victorian Eye and Ear Hospital has put in place appropriate internal controls and processes to ensure that it has complied with the requirements of hospital circular 07/2017 Compliance reporting in health portfolio entities (Revised) and has implemented a ‘Conflict of Interest’ policy consistent with the minimum accountabilities required by the VPSC. Declaration of private interest forms have been completed by all executive staff within The Royal Victorian Eye and Ear Hospital and members of the board, and all declared conflicts have been addressed and are being managed. Conflict of interest is a standard agenda item for declaration and documenting at each executive board meeting.

Jenni BlissInterim Accountable OfficerThe Royal Victorian Eye and Ear Hospital20 August 2019

Integrity, fraud and corruptionI, Jenni Bliss certify that The Royal Victorian Eye and Ear Hospital has put in place appropriate internal controls and processes to ensure that integrity, fraud and corruption risks have been reviewed and addressed at The Royal Victorian Eye and Ear Hospital during the year.

Jenni BlissInterim Accountable OfficerThe Royal Victorian Eye and Ear Hospital20 August 2019

Compliance with Health Purchasing Victoria (HPV) Health Purchasing PoliciesI, Jenni Bliss, certify that The Royal Victorian Eye and Ear Hospital has put in place appropriate internal controls and processes to ensure that it has complied with all requirements set out in the HPV Health Purchasing Policies including mandatory HPV collective agreements as required by the Health Services Act 1988 (Vic) and has critically reviewed these controls and processes during the year.

Jenni BlissInterim Accountable OfficerThe Royal Victorian Eye and Ear Hospital20 August 2019

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Financial and Service PerformancePart A: Strategic PrioritiesGoals Strategies Health Service Deliverables Outcomes

Better Health

A system geared to prevention as much as treatment

Everyone understands their own health and risks

Illness is detected and managed early

Healthy neighborhoods and communities encourage healthy lifestyles

Better Health

Reduce statewide risks

Build healthy neighborhoods

Help people to stay healthy

Target health gaps

Continue to build on the Wellbeing Program by raising staff awareness via emails, posters, 12 month Wellbeing activity planner, intranet page and providing initiatives that support positive physical and psychological health. This will be measured by number of early interventions, participation levels, evaluation forms, employee assistance program usage trends and staff surveys.

Complete

Implemented wellbeing activities. Over the past 12 months this has included: 95 early intervention activities, 40% staff participation in wellness@work initiatives, stable level of participation in employee assistance counselling and higher than benchmark results across all areas of People Matter Survey.

Build healthy neighbourhoods and target health gaps through the establishment of an Ophthalmology Clinic in partnership with the Victorian Aboriginal Health Service (VAHS), by June 2019.

Complete

Clinic established in December 2018

Better Access

Care is always there when people need it

More access to care in the home and community

People are connected to the full range of care and support they need

There is equal access to care

Better Access

Plan and invest

Unlock innovation

Provide easier access

Ensure fair access

Invest in our future by progressing with the redevelopment project.

Ongoing

Redevelopment project continues to progress with demolition and excavation nearing completion. Recent review completed by OPV.

Continue to improve access to Specialist Clinics in order to meet the Statement of Priorities targets by progressing SCAIP projects related to glaucoma, ocular motility and surgical ophthalmology service in a sustainable manner

Complete

SCAIP projects have delivered positive improvements in increasing number of patients seen and reduced waiting times. All projects are in BAU phase.

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Goals Strategies Health Service Deliverables Outcomes

Better Care

Target zero avoidable harm

Healthcare that focusses on outcomes

Patients and carers are active partners in care

Care fits together around people’s needs

Better Care

Put quality first

Join up care

Partner with patients

Strengthen the workforce

Embed evidence

Ensure equal care

Expand the capability of the electronic medical record to support improved quality and safety of care. This will include: implementation of targeted advanced clinical documentation, streamlined approach to recording of allergies and alerts, and uploading of discharge summaries to My Health Record.

Ongoing

Allergies and alerts project officer appointed and work progressing to plan.

Complete

Discharge summaries now being loaded in My Health Record

Ongoing

Board has committed funds to expand EMR capability. Project Manager appointed and project plan developed

Work with consumers and staff to review the health literacy of our patient information factsheets. Identify gaps where our information does not meet the health literacy requirements, and develop a plan to address these.

Complete

Work completed to review information and address gaps

Specific 2018-19 priorities (mandatory)

Disability Action Plans

Draft disability action plans are completed in 2018-19.

Submit a draft disability action plan to the department by 30 June 2019. The draft plan will outline the approach to full implementation within three years of publication.

Complete

Disability action plan updated, endorsed by Board and provided to Office for Disability.

Volunteer engagement

Ensure that the health service executives have appropriate measures to engage and recognise volunteers.

Work with staff and volunteers to identify two new role opportunities for volunteering at the Eye and Ear and increase the number of times we recruit to twice each year to meet this increased demand.

Complete

Bullying and harassment

Actively promote positive workplace behaviours and encourage reporting. Utilise staff surveys, incident reporting data, outcomes of investigations and claims to regularly monitor and identify risks related to bullying and harassment, in particular include as a regular item in Board and Executive meetings. Appropriately investigate all reports of bullying and harassment and ensure there is a feedback mechanism to staff involved and the broader health service staff.

Deliver initiatives as outlined in the Strategic Workforce Plan to promote a culture of respect and empowering staff to adequately address and eliminate inappropriate behaviours. This will include tailored leadership development programs, staff education workshops, Value Awards, online training, reporting complaints to the Executive Team and Board and implementing recommendations of complaint outcomes.

Complete

Leadership programs tailored to include managing inappropriate behaviour.

Complete

Promoting appropriate workplace training course for all staff has been developed and manager training modules updated.

Complete

Staff complaints are proactively managed and are reported to Executive and Board on a quarterly basis.

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Goals Strategies Health Service Deliverables Outcomes

Occupational violence

Ensure all staff who have contact with patients and visitors have undertaken core occupational violence training, annually. Ensure the department’s occupational violence and aggression training principles are implemented.

Deliver on our Occupational Violence and Aggression management plan with a focus on sustainable staff education, training and support.

Ongoing

Plan has been developed and implementation underway.

Complete

DHHS Occupational Violence training material reviewed and incorporated.

Environmental Sustainability

Actively contribute to the development of the Victorian Government’s policy to be net zero carbon by 2050 and improve environmental sustainability by identifying and implementing projects, including workforce education, to reduce material environmental impacts with particular consideration of procurement and waste management, and publicly reporting environmental performance data, including measureable targets related to reduction of clinical, sharps and landfill waste, water and energy use and improved recycling.

Continue to identify Environmental Sustainability Design initiatives through the redevelopment project to reduce waste, water and energy use, and monitored by the trend line.

Ongoing

strategies to reduce waste, water and energy use incorporated in redevelopment planning.

LGBTI

Develop and promulgate service level policies and protocols, in partnership with LGBTI communities, to avoid discrimination against LGBTI patients, ensure appropriate data collection, and actively promote rights to free expression of gender and sexuality in healthcare settings. Where relevant, services should offer leading practice approaches to trans and intersex related interventions.

Review the Eye and Ear policies and procedures to ensure they comply with the Rainbow e-Quality Guide to promote an inclusive culture by June 2019.

Complete

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Part B: Performance Priorities

High quality and safe care

Key performance indicator Target Result

Accreditation

Accreditation against the National Safety and Quality Health Service Standards Accredited Achieved

Infection prevention and control

Compliance with the Hand Hygiene Australia Program 80% Achieved

Percentage of health care workers immunised for influenza 80% 82%

Patient experience

Victorian Healthcare Experience Survey – percentage of positive patient experience responses Q1 95% 96%

Victorian Healthcare Experience Survey – percentage of positive patient experience responses Q2 95% 97%

Victorian Healthcare Experience Survey – percentage of positive patient experience responses Q3 95% 90%

Victorian Healthcare Experience Survey – percentage of very positive responses to questions on discharge care Q1 75% 75%

Victorian Healthcare Experience Survey – percentage of very positive responses to questions on discharge care Q2 75% 77%

Victorian Healthcare Experience Survey – percentage of very positive responses to questions on discharge care 3 75% 73%

Victorian Healthcare Experience Survey – patients perception of cleanliness Q1 70% 64%

Victorian Healthcare Experience Survey – patients perception of cleanliness Q2 70% 70%

Victorian Healthcare Experience Survey – patients perception of cleanliness Q3 70% 60%

Healthcare associated infections

Rate of patients with SAB¹ per occupied bed day ≤ 1/10,000 0

Adverse Events

Sentinel events – root cause analysis (RCA) reporting

All RCA reports submitted within 30 business days n/a

Strong Governance, Leadership and Culture

Key performance indicator Target Result

Organisational culture

People Matter Survey – percentage of staff with a positive response to safety culture questions 80% 94%

People matter survey – percentage of staff with a positive response to the question, “I am encouraged by my colleagues to report any patient safety concerns I may have” 80% 97%

People matter survey – percentage of staff with a positive response to the question, “Patient care errors are handled appropriately in my work area” 80% 97%

People Matter Survey – percentage of staff with a positive response to the question, “My suggestions about patient safety would be acted upon if I expressed them to my manager” 80% 95%

People Matter Survey – percentage of staff with a positive response to the question, “The culture in my work area makes it easy to learn from the errors of others” 80% 94%

People Matter Survey – percentage of staff with a positive response to the question, “Management is driving us to be a safety-centred organisation” 80% 96%

People Matter Survey – percentage of staff with a positive response to the question, “This health service does a good job of training new and existing staff” 80% 84%

People Matter Survey – percentage of staff with a positive response to the question, “Trainees in my discipline are adequately supervised” 80% 91%

People Matter Survey – percentage of staff with a positive response to the question, “I would recommend a friend or relative to be treated as a patient here” 80% 97%

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Timely access to care

Emergency care

Percentage of ambulance patients transferred within 40 minutes 90% 100%

Percentage of Triage Category 1 emergency patients seen immediately 100% N/A

Percentage of Triage Category 1 to 5 emergency patients seen within clinically recommended times

80% 83%

Percentage of emergency patients with a length of stay in the emergency department of less than four hours

81% 76%

Number of patients with length of stay in the Emergency Department greater than 24 hours 0 0

Elective Surgery

Percentage of Urgency Category 1 elective patients removed within 30 days 100% 100%

Percentage of Urgency Category 1, 2 and 3 elective patients admitted within clinically recommended timeframes

94% 93%

Percentage of patients on the ESWL that are overdue 5% or 15% proportional improvement from prior

year

9%

Number of patients on the elective surgery waiting list 2,650 2,662

Number of hospital initiated postponements per 100 scheduled admissions <7/100 3

Number of patients admitted from the elective surgery waiting list – annual total 13,540 13,174

Specialist clinics

Percentage of urgent patients referred by a GP or external specialist who attended a first appointment within 30 days

100% 90%

Percentage of routine patients referred by GP or external specialist who attended a first appointment within 365 days

90% 92%

Effective financial management

Key performance indicator Target Result

Operating Result ($M) 0.000 0.148

Average Number of Days to Paying Trade Creditors 60 days 54 days

Average Number of Days to Receiving Patient Fee Debtors 60 days 37 days

Public and Private WIES Activity Performance to Target 100% 97%

Adjusted Current Asset Ratio 0.7 3.3

Forecast number of days a health service can maintain its operations with unrestricted available cash (based on end of year forecast) 14.0 days 72.6 days

Actual number of days a health service can maintain its operations with unrestricted available cash, measured on the last day of each month 14.0 days 72.6 days

Measures the accuracy of forecasting the Net result from transactions (NRFT)

for the current financial year ending 30 June. Variance _ $250,000 $1,509,950v

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Part C: Activity and Funding

Funding Type2018-2019

Activity Achievement

Acute Admitted

WIES Public 9040.5

WIES Private 2701.6

WIES DVA 58.4

WIES TAC 2.9

Other admitted 0

Acute non-admitted

Emergency Services 43,790

Specialist Clinics 133,588

Specialist Clinics - DVA 206

Other

Health Workforce 0

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30Additional Information Available on Request (FRD 22H Appendix)

In compliance with the requirements of FRH 22H Standard Disclosures in the Report of Operations, details in respect of the items listed below have been retained by The Royal Victorian Eye and Ear Hospital and are available to the relevant Ministers, Members of Parliament and the public on request (subject to the freedom of information requirements, if applicable):

• Declarations of pecuniary interests have been duly completed by all relevant officers.

• Details of shares held by senior officers as nominee or held beneficially.

• Details of publications produced by the entity about itself, and how these can be obtained.

• Details of changes in prices, fees, charges, rates and levies charged by The Royal Victorian Eye and Ear Hospital.

• Details of any major external reviews carried out on The Royal Victorian Eye and Ear Hospital.

• Details of major research and development activities undertaken by The Royal Victorian Eye and Ear Hospital that are not otherwise covered either in the report of operations or in a document that contains the financial statements and report of operations.

• Details of overseas visits undertaken including a summary of the objectives and outcomes of each visit.

• Details of major promotional, public relations and marketing activities undertaken by the Health Service to develop community awareness of The Royal Victorian Eye and Ear Hospital and its services.

• Details of assessments and measures undertaken to improve the occupational health and safety of employees.

• General statement on industrial relations within The Royal Victorian Eye and Ear Hospital and details of time lost through industrial accidents and disputes, which is not otherwise detailed in the report of operations.

• A list of major committees sponsored by The Royal Victorian Eye and Ear Hospital, the purposes of each committee and the extent to which those purposes have been achieved.

• Details of all consultancies and contractors including consultants/contractors engaged, services provided, and expenditure committed for each engagement.

The annual report of the Royal Victorian Eye and Ear Hospital is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identification of the Department’s compliance with statutory disclosure requirements.

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Disclosure Index

Legislation Requirement Page Reference

Ministerial Directions

Report of Operations

Charter and purpose

FRD 22H Manner of establishment and the relevant Ministers 2

FRD 22H Purpose, functions, powers and duties 2

FRD 22H Nature and range of services provided 2

FRD 22H Activities, programs and achievements for the reporting period 3

FRD 22H Significant changes in key initiatives and expectations for the future 3

Management and structure

FRD 22H Organisational structure 16

FRD 22H Workforce data/ employment and conduct principles 18

FRD 22H Occupational Health and Safety 18

Financial information

FRD 22H Summary of the financial results for the year 18

FRD 22H Significant changes in financial position during the year 18

FRD 22H Operational and budgetary objectives and performance against objectives

18

FRD 22H Subsequent events 76

FRD 22H Details of consultancies under $10,000 19

FRD 22H Details of consultancies over $10,000 19

FRD 22H Disclosure of ICT expenditure 19

Legislation

FRD 22H Application and operation of Freedom of Information Act 1982 20

FRD 22H Compliance with building and maintenance provisions of Building Act 1993

20

Other relevant reporting directives

FRD 25C Victorian Industry Participation Policy Act 2003 21

Other reporting requirements

Compliance with Health Purchasing Victoria (HPV) Health Purchasing Policies

23

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Financial Statements

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Board Members, Accountable Officer’s and Chief Finance and Account Officer’s Declaration

The attached financial statements for The Royal Victorian Eye and Ear Hospital have been prepared in accordance with Direction 5.2 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash

flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2019 and financial position of The Royal Victorian Eye and Ear Hospital at 30 June 2019.

At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 20 August 2019.

Dr Sherene DevanesenChair, Board of Directors20 August 2019

Jenni BlissInterim Accountable Officer20 August 2019

Danny MennuniChief Finance and Accounting Officer20 August 2019

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Independent Auditor’s Report To the Board of The Royal Victorian Eye and Ear Hospital

Opinion I have audited the financial report of The Royal Victorian Eye and Ear Hospital (the health service) which comprises the:

• balance sheet as at 30 June 2019 • comprehensive operating statement for the year then ended • statement of changes in equity for the year then ended • cash flow statement for the year then ended • notes to the financial statements, including significant accounting policies • board member’s, accountable officer’s and chief finance & accounting officer’s declaration.

In my opinion the financial report presents fairly, in all material respects, the financial position of the health service as at 30 June 2019 and their financial performance and cash flows for the year then ended in accordance with the financial reporting requirements of Part 7 of the Financial Management Act 1994 and applicable Australian Accounting Standards.

Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report.

My independence is established by the Constitution Act 1975. My staff and I are independent of the health service in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Other information

The Board of the health service are responsible for the Other Information, which comprises the information in the health service’s annual report for the year ended 30 June 2019, but does not include the financial report and my auditor’s report thereon.

My opinion on the financial report does not cover the Other Information and accordingly, I do not express any form of assurance conclusion on the Other Information. However, in connection with my audit of the financial report, my responsibility is to read the Other Information and in doing so, consider whether it is materially inconsistent with the financial report or the knowledge I obtained during the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude there is a material misstatement of the Other Information, I am required to report that fact. I have nothing to report in this regard.

Board’s responsibilities for the financial report

The Board of the health service is responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Financial Management Act 1994, and for such internal control as the Board determines is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Board is responsible for assessing the health service’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is inappropriate to do so.

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2

Auditor’s responsibilities for the audit of the financial report

As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit. My objectives for the audit are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the health service’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board

• conclude on the appropriateness of the Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the health service’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the health service to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

MELBOURNE 22 August 2019

Travis Derricott as delegate for the Auditor-General of Victoria

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Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 2019 2018$'000 $'000

Income from Transactions:

Operating Activities 2.1 142,061 154,231 Non-Operating Activities 2.1 5,346 3,816

Total Income from Transactions 147,407 158,047

Expenses from Transactions:

Employee Expenses 3.1 (74,609) (68,974) Supplies and Consumables 3.1 (27,633) (27,288) Finance Costs 3.1 (559) - Other Operating Expenses 3.1 (12,828) (12,168) Other Non-Operating Expenses 3.1 - (101) Depreciation and Amortisation 4.4 (13,261) (13,707)

Total Expenses from Transactions (128,890) (122,238)

Net Result from Transactions - Net Operating Balance 18,517 35,809

Other Economic Flows Included In Net Result:

Net Gain/(Loss) on Non-Financial Assets 3.2 (1,720) 587 Net Gain/(Loss) on Financial Instruments at Fair Value 3.2 (1,754) (18) Other Gain/(Loss) from Other Economic Flows 3.2 (614) 70

Total Other Economic Flows Included In Net Result (4,088) 639

Net Result For The Year 14,429 36,448

Other Comprehensive Income:

Items that Will Not Be Reclassified to Net ResultChanges in Property, Plant and Equipment Revaluation Surplus 4.2(f) (22,345) -

- 1,766

Total Other Comprehensive Income (22,345) 1,766

Comprehensive Result for the Year (7,916) 38,214

The Royal Victorian Eye and Ear HospitalComprehensive Operating StatementFor the Financial Year Ended 30 June 2019

This Statement should be read in conjunction with the accompanying Notes.

Items that May Be Reclassified Subsequently to Net ResultChanges to Financial Assets Available-for-Sale Revaluation Surplus

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Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 2019 2018$'000 $'000

Current AssetsCash and Cash Equivalents 6.2 35,198 5,373 Receivables 5.1 1,777 4,166 Investments and Other Financial Assets 4.1 43,617 80,520 Inventories 5.5 270 269 Prepayments and Other Assets 5.4 1,175 929

Total Current Assets 82,037 91,257

Non-Current AssetsReceivables 5.1 3,131 1,960 Property, Plant and Equipment 4.2 225,969 221,890 Intangible Assets 4.3 2,931 2,604 Investment Properties 4.5 12,610 14,311

Total Non-Current Assets 244,641 240,765

Total Assets 326,678 332,022

Current LiabilitiesPayables 5.2 9,092 9,465 Provisions 3.4 15,710 13,631 Other Current Liabilities 5.3 66 51

Total Current Liabilities 24,868 23,147

Non-Current LiabilitiesProvisions 3.4 3,662 3,115 Borrowings 6.1 8,346 7,788

Total Non-Current Liabilities 12,008 10,903

Total Liabilities 36,876 34,050

Net Assets 289,802 297,972

EquityProperty, Plant and Equipment Revaluation Surplus 4.2(f) 67,428 89,773 Financial Asset Available-for-Sale Revaluation Surplus - 3,872 General Purpose Surplus 110 182 Restricted Specific Purpose Surplus 56,418 66,194 Contributed Capital 51,568 51,568 Accumulated Surpluses/(Deficits) 114,278 86,383

Total Equity 289,802 297,972

Balance SheetAs at 30 June 2019

The Royal Victorian Eye and Ear Hospital

This Statement should be read in conjunction with the accompanying Notes.

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Fina

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l Sta

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Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 2019 2018$'000 $'000

Cash Flows From Operating Activities:

Operating Grants from Government 98,741 88,910 Capital Grants from Government 3,803 13,792 Other Capital Receipts - 627 Patient Fees Received 4,575 4,574 Private Practice Fees Received 2,363 2,420 Donations and Bequests Received 772 710 Capital Donations and Bequests Received 128 2,443 GST Received from / (Paid to) ATO 3,337 3,024 Interest and Investment Income Received 5,472 2,885 Car Park Income Received 477 405 Other Receipts 7,756 4,894

Total Receipts 127,424 124,684

Employee Expenses Paid (71,481) (65,249) Payments for Supplies and Consumables (27,654) (26,304) Payments for Medical Indemnity Insurance (1,260) (1,259) Payments for Repairs and Maintenance (1,495) (1,489) Other Payments (15,554) (13,639)

Total Payments (117,444) (107,940)

Net Cash Flow From/(Used In) Operating Activities 8.1 9,980 16,744

Cash Flows From Investing Activities:Proceeds from Sale / (Purchase) of Investments 35,000 (14,000) Purchase of Non-Financial Assets (15,155) (12,727)

Net Cash Flow From/(Used In) Investing Activities 19,845 (26,727)

Cash Flows From Financing Activities:Proceeds from Borrowings - 8,680

Net Cash Flow From/(Used In) Financing Activities - 8,680

Net Increase/(Decrease) In Cash And Cash Equivalents Held 29,825 (1,303)

Cash and Cash Equivalents at Beginning of Year 5,373 6,676

Cash and Cash Equivalents at End of Year 6.2 35,198 5,373

Cash Flow Statement For the Financial Year Ended 30 June 2019

The Royal Victorian Eye and Ear Hospital

This Statement should be read in conjunction with the accompanying Notes.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

● The fair value of land, buildings, infrastructure and plant and equipment, (refer Note 4.2);● Defined benefit superannuation expense (refer Note 3.5); and• Employee benefit provisions are based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates (refer to Note 3.4).

The accrual basis of accounting has been applied in preparing these financial statements, whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

These financial statements are in Australian dollars and the historical cost convention is used unless a different measurement basis is specifically disclosed in the note associated with the item measured on a different basis.

Note 1: Summary of Significant Accounting Policies

These annual financial statements represent the audited general purpose financial statements for The Royal Victorian Eye and Ear Hospital ("the hospital") for the period ending 30 June 2019. The report provides users with information about the hospital's stewardship of resources entrusted to it.

(a) Statement of Compliance

These financial statements are general purpose financial statements which have been prepared in accordance with the Financial Management Act 1994 and applicable AASBs, which include interpretations issued by the Australian Accounting Standards Board (AASB). They are presented in a manner consistent with the requirements of AASB 101 Presentation of Financial Statements.

The Royal Victorian Eye and Ear Hospital is a not-for profit entity and therefore applies the additional Aus paragraphs applicable to “not-for-profit” hospitals under the AASBs.

The hospital operates on a fund accounting basis and maintains three funds: Operating, Specific Purpose and Capital Funds.

The financial statements also comply with relevant Financial Reporting Directions (FRDs) issued by the Department of Treasury & Finance, and relevant Standing Directions (SDs) under the Financial Management Act 1994.

The financial statements, except for cash flow information, have been prepared using the accrual basis of accounting. Under the accrual basis, items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definitions and recognition criteria for those items, that is they are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

(c) Basis of Accounting Preparation and Measurement

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The financial statements include all the controlled activities of The Royal Victorian Eye and Ear Hospital.

The accounting policies set out below have been applied in preparing the financial statements for the year ending 30 June 2019, and the comparative information presented in these financial statements for the year ending 30 June 2018.

The financial statements are prepared on a going concern basis (refer Note 8.8).

All amounts shown in the financial statements have been rounded to the nearest thousand dollars, unless otherwise stated. Minor discrepancies in tables between totals and sum of components are due to rounding.

A description of the nature of the hospital’s operations and its principal activities is included in the report of operations, which does not form part of these financial statements.

(b) Reporting Entity

Its principal address is:

The financial statements are presented in Australian dollars, the functional and presentation currency of the hospital.

32 Gisborne Street, East Melbourne, Victoria 3002.

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AASBs that have significant effects on the financial statements and estimates relate to:

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Where applicable, the comparative figures have been restated to align with the presentation in the current year. Comparative figures have been restated in Notes 2.1, 3.1, 3.4, 5.2, 7.1 and 8.1.

(e) Comparatives

Financial Assets Available-for-Sale Revaluation Surplus

The available-for-sale revaluation surplus arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, that portion of the surplus which relates to that financial asset is effectively realised and is recognised in the Comprehensive Operating Statement. Where a revalued financial asset is impaired that portion of the surplus which relates to that financial asset is recognised in the Comprehensive Operating Statement.

Specific Restricted Purpose Surplus

The Specific Restricted Purpose Surplus is established where the hospital has possession or title to the funds but has no discretion to amend or vary the restriction and/or condition underlying the funds received.

Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses of the hospital.

Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners. Transfers of net liabilities arising from administrative restructurings are treated as distributions to owners.

Other transfers that are in the nature of contributions or distributions or that have been designated as contributed capital are also treated as contributed capital.

(d) Equity

Commitments and contingent assets and liabilities are presented on a gross basis.

Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office (ATO). In this case the GST payable is recognised as part of the cost of acquisition of the asset or as part of the expense.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the ATO, are presented as operating cash flow.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the Balance Sheet.

Contributed Capital

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 2: Funding the Delivery of Services

Note 2.1: Income from Transactions

2019 2018$'000 $'000

98,875 92,370 28,679 44,554

129 3,070 4,549 4,790 2,363 2,420 1,833 1,694 5,633 5,333

Total Income from Operating Activities 142,061 154,231

Capital Interest 916 676 Other Interest - 892 Dividends 4,430 2,248

Total Income from Non-Operating Activities 5,346 3,816

Total Income from Transactions 147,407 158,047

The Department of Health and Human Services makes some payments on behalf of health services as follows:

Commercial Activities (i)

The hospital’s overall objective is to provide quality health services that support and enhance the wellbeing of all Victorians.

The hospital is predominantly funded by accrual based grant funding for the provision of outputs. The hospital also receives income from the supply of goods and services.

2.1 Income from TransactionsStructure:

Non-Cash Contributions from the Department of Health and Human Services

Private Practice Fees

Other Revenue from Operating Activities (including Non-Capital Donations)

Government Grants - OperatingGovernment Grants - CapitalOther Capital Purpose Income (including Capital Donations)Patient Fees

● The Victorian Managed Insurance Authority non-medical indemnity insurance payments are recognised as revenue following advice from the Department of Health and Human Services; and● Long Service Leave (LSL) revenue is recognised upon finalisation of movements in LSL liability in line with the long service leave funding arrangements set out in the relevant Department of Health and Human Services Hospital Circular.

(i) Commercial activities represent business activities which the hospital enters into to support its operations.

Contributions are deferred as income in advance when the hospital has a present obligation to repay them and the present obligation can be reliably measured.

Revenue Recognition

Income is recognised in accordance with AASB 118 Revenue and is recognised to the extent that it is probable that the economic benefits will flow to the hospital and the income can be reliably measured at fair value. Unearned income at reporting date is reported as income received in advance.

Amounts disclosed as revenue are, where applicable, net of returns, allowances and duties and taxes.

Government Grants and Other Transfers of Income (other than Contributions by Owners)

In accordance with AASB1004 Contributions , government grants and other transfers of income (other than contributions by owners) are recognised as income when the hospital gains control of the underlying assets irrespective of whether conditions are imposed on the hospital’s use of the contributions.

Patient Fees

Patient fees are recognised as revenue on an accrual basis.

The Department of Health and Human Services makes certain payments on behalf the hospital. These amounts have been brought to account as grants in determining the operating result for the year by recording them as revenue.

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T 2018–19

Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Other Revenue

Dividend revenue is recognised when the right to receive payment is established. Dividends represent the income arising from the hospital’s investments in financial assets.

Other income is recognised as revenue when received. Other income includes recoveries for salaries and wages and external services provided and donations and bequests. If donations are for a specific purpose, they may be appropriated to a surplus, such as the specific restricted purpose surplus.

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield of the financial asset, which allocates interest over the relevant period.

Dividend Revenue

Interest Revenue

Revenue from commercial activities such as car park and property rental income are recognised on an accrual basis.

Private Practice Fees

Revenue from Commercial Activities

Private practice fees are recognised as revenue at the time invoices are raised, and include recoupments from private practice for the use of hospital facilities.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 3: The Cost of Delivering Services

2019 2018$'000 $'000

56,645 53,091 14,691 13,164 1,395 1,114 1,255 1,095

623 510

Total Employee Expenses 74,609 68,974

5,017 5,086 17,832 17,659

948 917 3,836 3,626

Total Supplies and Consumables 27,633 27,288

559 -

Total Finance Costs 559 -

2,557 2,242 511 520 984 969

1,260 1,259 7,495 6,997

21 181

Total Other Operating Expenses 12,828 12,168

13,261 13,707 - 101

Total Other Non-Operating Expenses 13,261 13,808

Total Expenses from Transactions 128,890 122,238

This section provides an account of the expenses incurred by the hospital in delivering services and outputs. In Note 2, the funds that enable the provision of services were disclosed and in this note the cost associated with provision of services are recorded.

Structure:

3.4 Employee Benefits in the Balance Sheet3.5 Superannuation

3.1 Expenses from Transactions

3.3 Analysis of Expense and Revenue by Internally Managed and Restricted Specific Purpose Funds3.2 Other Economic Flows

Other Supplies and Consumables

Fuel, Light, Power and WaterRepairs and Maintenance

Depreciation and Amortisation (refer Note 4.4)Assets and Services Provided Free of Charge or for Nominal Consideration

Medical Indemnity InsuranceOther Administrative ExpensesExpenditure for Capital Purposes

Note 3.1: Expenses from Transactions

Expense Recognition

Expenses are recognised as they are incurred and reported in the financial year to which they relate.

Medical and Surgical Supplies (including Prostheses)

Salaries and Wages

Maintenance Contracts

On-CostsAgency ExpensesFee for Service Medical Officer ExpensesWorkcover Premium

Drug Supplies

Finance Costs

Diagnostic and Radiology Supplies

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018$'000 $'000

(1,701) 766 (19) (179)

(1,720) 587

149 (18) (1,903) -

(1,754) (18)

(614) 70

(614) 70

(4,088) 639

Supplies and Consumables

Non-Operating Expenses

Other non-operating expenses generally represent expenditure for outside the normal operations such as depreciation and amortisation and assets and services provided free of charge or for nominal consideration.

● Other administrative expenses; and● Repairs and maintenance;

Supplies and consumables costs are recognised as an expense in the reporting period in which they are incurred. The carrying amounts of any inventories held for distribution are expensed when distributed.

The Department of Health and Human Services also makes certain payments on behalf of the hospital. These amounts have been brought to account as grants in determining the operating result for the year by recording them as revenue and also recording the related expense.

Other Operating Expenses

Employee expenses include:● Salaries and wages (including fringe benefits tax, leave entitlements, termination payments);

● Agency expenses;● On-costs;

Other operating expenses generally represent the day-to-day running costs incurred in normal operations and include such things as:

● Expenditure for capital purposes (includes expenditure related to the purchase of assets that are below the capitalisation threshold).

● Fuel, light and power;

Note 3.2: Other Economic Flows

Net Gain/(Loss) on Non‑Financial Assets:

Total Net Gain/(Loss) on Non‑Financial Assets

Total Other Gains/(Losses) from Other Economic Flows

Other Gains/(Losses) from Other Economic Flows:

Total Gains/(Losses) from Other Economic Flows

Net Gain/(Loss) on Financial Instruments at Fair Value:

Allowance for Impairment Losses of Contractual Receivables

Total Net Gain/(Loss) on Financial Instruments at Fair Value

Net Gain/(Loss) from Revaluation of Long Service Leave Liability

● Fee for service medical officer expenses; and● Work cover premium.

Employee Expenses

Gain/(Loss) on Revaluation of Investment PropertyNet Gain/(Loss) on Disposal of Property Plant and Equipment

Other economic flows are changes in the volume or value of an asset or liability that do not result from transactions. Other gains/(losses) from other economic flows include the gains or losses from:

● The revaluation of the present value of the long service leave liability due to changes in the bond interest rates; and● Reclassified amounts relating to available-for-sale financial instruments from the reserves to net result due to a disposal or derecognition of the financial instrument. This does not include reclassification between equity accounts due to machinery of government changes or ‘other transfers’ of assets.

Other Gains/(Losses) on Financial Instruments

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018 2019 2018$'000 $'000 $'000 $'000

Commercial ActivitiesPrivate Practice and Other Patient Activities 976 870 938 930 Pharmacy Services 67 63 112 107 Car Park 93 89 478 405 Property 43 - 661 -

Other ActivitiesFundraising and Community Support 689 508 836 690 Research and Scholarship 353 290 370 482 Investments - - 1,663 1,632 Education and Training - - - 1

Total 2,221 1,820 5,058 4,247

● Revaluation gains/ (losses) of non-financial physical assets (refer Note 4.2); and

Other gains/(losses) include:● The revaluation of the present value of the long service leave liability due to changes in the bond rate movements, inflation rate movements and the impact of changes in probability factors; and

● Transfer of amounts from the reserves to accumulated surplus or net result due to disposal or derecognition or reclassification.

Other Gains/(Losses) from Other Economic Flows

Goodwill and intangible assets with indefinite useful lives (and intangible assets not available for use) are tested annually for impairment and whenever there is an indication that the asset may be impaired.

Note 3.3: Analysis of Expense and Revenue by Internally Managed and Restricted Specific Purpose Funds

Expense Revenue

Net Gain/(Loss) on Non-Financial Assets

Impairment of Non-Financial Assets

● Net gain/(loss) on disposal of non-financial assets (any gain or loss on the disposal of non-financial assets is recognised at the date of disposal).

Net gain/(loss) on financial instruments at fair value includes:● Realised and unrealised gains and losses from revaluations of financial instruments at fair value;● Impairment and reversal of impairment for financial instruments at amortised cost (refer Notes 4.1 and 7.1); and● Disposals of financial assets and derecognition of financial liabilities.

Net Gain/(Loss) on Financial Instruments at Fair Value

Net gain/(loss) on non-financial assets and liabilities includes realised and unrealised gains and losses as follows:

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018$'000 $'000

158 145

3,736 4,553 1,601 285

900 850 7,838 6,489

- 31

14,233 12,353

487 568 990 710

1,477 1,278

15,710 13,631

3,314 2,819 348 296

3,662 3,115

19,372 16,746

Note 3.4 (a) Employee Benefits and Related On-Costs

2019 2018$'000 $'000

9,655 8,109 5,897 5,346

158 145 Employee Termination Benefits - 31

3,662 3,115

19,372 16,746

Note 3.4 (b) Movements in On-Costs Provision

1,574 1,449

914 822 64 (7)

(727) (690)

Balance at End of Year 1,825 1,574

Note 3.4: Employee Benefits in the Balance Sheet

Total Employee Benefits including Related On-Costs

Non-Current Employee Benefits including Related On-CostsConditional Long Service Leave Entitlements (ii)

Unconditional Long Service Leave EntitlementsAnnual Leave EntitlementsAccrued Days Off

Provisions related to Employee Benefits On-Costs

Total Non-Current Provisions

Total Provisions

Current Employee Benefits including Related On-Costs

- Unconditional and expected to be settled after 12 months (iii)

Conditional Long Service Leave

Current ProvisionsEmployee Benefits (i)

Annual Leave- Unconditional and expected to be settled wholly within 12 months (ii)

- Unconditional and expected to be settled wholly after 12 months (iii)

Long Service Leave- Unconditional and expected to be settled wholly within 12 months (ii)

- Unconditional and expected to be settled wholly after 12 months (iii)

Provisions related to Employee Benefit On-Costs

Non-Current Provisions

- Unconditional and expected to be settled wholly within 12 months (ii)

Total Current Provisions

(i) Employee benefits consist of amounts for accrued days off, annual leave and long service leave accrued by employees, not including on-costs.

Accrued Days Off- Unconditional and expected to be settled wholly within 12 months (ii)

Balance at Start of Year

Additional Provisions RecognisedUnwinding of Discount and Effect of Changes in the Discount RateReduction due to Transfer Out

- Unconditional and expected to be settled within 12 months (ii)

(ii) The amounts disclosed are nominal amounts.(iii) The amounts disclosed are discounted to present values.

Employee Termination Benefits

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

The amount recognised as a liability is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

Provisions are recognised when the hospital has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

Provisions

Termination benefits are payable when employment is terminated before the normal retirement date or when an employee decides to accept an offer of benefits in exchange for the termination of employment.

Termination Benefits

Conditional LSL is disclosed as a non-current liability. Any gain or loss on revaluation of the present value of non-current LSL liability is recognised as a transaction, except to the extent that a gain or loss arises due to changes in estimations e.g. bond rate movements, inflation rate movements and changes in probability factors which are then recognised as other economic flows.

The components of this current LSL liability are measured at:● Nominal value – if the hospital expects to wholly settle within 12 months; or● Present value – if the hospital does not expect to wholly settle within 12 months.

Unconditional LSL is disclosed in the notes to the financial statements as a current liability, even where the hospital does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. An unconditional right arises after a qualifying period.

Liability for long service leave (LSL) is recognised in the provision for employee benefits.

Depending on the expectation of the timing of settlement, liabilities for annual leave and accrued days off are measured at:● Nominal value – if the hospital expects to wholly settle within 12 months; or● Present value – if the hospital does not expect to wholly settle within 12 months.

Liabilities for annual leave and accrued days off are all recognised in the provision for employee benefits as ‘current liabilities’ because the hospital does not have an unconditional right to defer settlements of these liabilities.

Provision is made for benefits accruing to employees in respect of accrued days off, annual leave and long service leave for services rendered to the reporting date, as an expense during the period that the services are delivered.

Provision for on-costs, such as workers compensation insurance premium and superannuation are recognised separately from provisions for employee benefits.

On-Costs Related to Employee Benefits

Long Service Leave

Annual Leave and Accrued Days Off

Employee Benefits Recognition

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 3.5: Superannuation

2019 2018 2019 2018$'000 $'000 $'000 $'000

Defined benefit plans(i):First State Super 148 164 - -

Defined contribution plans:First State Super 3,845 3,643 - - HESTA 1,792 1,510 - - Other 496 436 - -

Total Superannuation 6,281 5,753 - -

The hospital does not recognise any unfunded defined benefit liability in respect of the plans because the hospital has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance discloses the State's defined benefit liabilities in its disclosure for administered items.

Superannuation contributions paid or payable for the reporting period are included as part of employee benefits in the comprehensive operating statement of the hospital.

Defined Benefit Superannuation Plans

Defined Contribution Superannuation Plans

In relation to defined contribution (ie. accumulation) superannuation plans, the associated expense is simply the employer contributions that are paid or payable in respect of employees who are members of these plans during the reporting period. Contributions to defined contribution superannuation plans are expensed when incurred.

The amount charged to the Comprehensive Operating Statement in respect of defined benefit superannuation plans represents the contributions made by the hospital to the superannuation plans in respect of the services of current hospital staff during the reporting period. Superannuation contributions are made to the plans based on the relevant rules of the plan, and are based upon actuarial advice.

Contributions Paid for the Year

Contribution Outstanding at Year End

(i) The bases for determining the level of contributions is determined by the various actuaries of the defined benefit superannuation plans.

The name, details and amounts paid in relation to the major employee superannuation funds and contributions made by the hospital are as follows:

Employees of the hospital are entitled to receive superannuation benefits and the hospital contributes to both the defined benefit and defined contribution plans. The defined benefit plans provide benefits based on years of service and final average salary.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 4: Key Assets to Support Service Delivery

2019 2018$'000 $'000

Current Investments and Other Financial Assets

Australian Dollar Term Deposits > 3 months - 35,000 Managed Investment Schemes 43,617 45,520

Total Current Investments and Other Financial Assets 43,617 80,520

Total Investments and Other Financial Assets 43,617 80,520

Represented by:Hospital Investments 43,617 80,520

Total Investments and Other Financial Assets 43,617 80,520

Investments Recognition

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Investments are classified as financial assets at amortised cost or fair value through net result.

The hospital classifies its other financial assets between current and non-current assets based on the Board’s intention at balance date with respect to the timing of disposal of each asset.

The hospital's investments must comply with Standing Direction 3.7.2 - Treasury Management, including Central Banking System. The investment portfolio of the hospital is managed by Victorian Funds Management Corporation through specialist fund managers and a Master Custodian. The Master Custodian holds the investments and conducts settlements pursuant to instructions from the specialist fund managers.

All financial assets, except those measured at fair value through net result are subject to annual review for impairment.

The hospital assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

The hospital controls infrastructure and other investments that are utilised in fulfilling its objectives and conducting its activities. They represent the key resources that have been entrusted to the hospital to be utilised for delivery of those outputs.

Structure:4.1 Investments and Other Financial Assets

Note 4.1: Investments and Other Financial Assets

4.2 Property, Plant and Equipment

4.4 Depreciation and Amortisation4.3 Intangible Assets

4.5 Investment Properties

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Valuation Hierarchy

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

For the purpose of fair value disclosures, the hospital has determined classes of assets on the basis of the nature, characteristics and risks of the asset and the level of the fair value hierarchy.

In addition, the hospital determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Valuer-General Victoria (VGV) is the hospital’s independent valuation agency.

The estimates and underlying assumptions are reviewed on an ongoing basis.

● Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities;

● Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Identifying Unobservable Inputs (Level 3) Fair Value Measurement

Level 3 fair value inputs are unobservable valuation inputs for an asset or liability. These inputs require significant judgement and assumptions in deriving fair value for both financial and non-financial assets.

Revaluation surplus is not transferred to accumulated funds on de-recognition of the relevant asset, except where an asset is transferred via contributed capital.

In accordance with FRD 103H, the hospital's non-current physical assets were assessed to determine whether revaluation of the non-current physical assets was required.

● Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

Initial Recognition

Items of property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment loss. Where an asset is acquired for no or nominal cost, the cost is its fair value at the date of acquisition. Assets transferred as part of a merger/machinery of government change are transferred at their carrying amounts.

The cost of a leasehold improvement is capitalised as an asset and depreciated over the shorter of the remaining term of the lease or the estimated useful life of the improvements.

Theoretical opportunities that may be available in relation to the assets are not taken into account until it is virtually certain that any restrictions will no longer apply. Therefore, unless otherwise disclosed, the current use of these non-financial physical assets will be their highest and best uses.

Land and buildings are recognised initially at cost and subsequently measured at fair value less accumulated depreciation and accumulated impairment loss.

Revaluations of Non-Current Physical Assets

Non-current physical assets are measured at fair value and are revalued in accordance with FRD 103H Non-Current Physical Assets. This revaluation process normally occurs every five years, based upon the asset's Government Purpose Classification, but may occur more frequently if fair value assessments indicate material changes in values. Independent valuers are used to conduct these scheduled revaluations and any interim revaluations are determined in accordance with the requirements of the FRDs. Revaluation increments or decrements arise from differences between an asset’s carrying value and fair value.

Revaluation increments are recognised in ‘Other Comprehensive Income’ and are credited directly to the asset revaluation surplus, except that, to the extent that an increment reverses a revaluation decrement in respect of that same class of asset previously recognised as an expense in net result, the increment is recognised as income in the net result.

Revaluation decrements are recognised in ‘Other Comprehensive Income’ to the extent that a credit balance exists in the asset revaluation surplus in respect of the same class of property, plant and equipment.

Revaluation increases and revaluation decreases relating to individual assets within an asset class are offset against one another within that class but are not offset in respect of assets in different classes.

In determining fair values a number of inputs are used. To increase consistency and comparability in the financial statements, these inputs are categorised into three levels, also known as the fair value hierarchy. The levels are as follows:

Unobservable inputs shall be used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, ie. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.

Note 4.2: Property, Plant and Equipment

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Specialised Land and Specialised Buildings

Non-specialised land and non-specialised buildings are valued using the market approach. Under this valuation method, the assets are compared to recent comparable sales or sales of comparable assets which are considered to have nominal or no added improvement value.

Judgements about highest and best use must take into account the characteristics of the assets concerned, including restrictions on the use and disposal of assets arising from the asset’s physical nature and any applicable legislative/contractual arrangements.

In accordance with paragraph AASB 13.29, the hospital can assume the current use of a non-financial physical asset is its HBU unless market or other factors suggest that a different use by market participants would maximise the value of the asset.

Non-Specialised Land and Non-Specialised Buildings

The market approach is also used for specialised land although it is adjusted for the community service obligation (CSO) to reflect the specialised nature of the assets being valued. Specialised assets contain significant, unobservable adjustments; therefore these assets are classified as Level 3 under the market based direct comparison approach.

For non-specialised land and non-specialised buildings, an independent valuation was performed by the Valuer-General Victoria to determine the fair value using the market approach. Valuation of the assets was determined by analysing comparable sales and allowing for share, size, topography, location and other relevant factors specific to the asset being valued. An appropriate rate per square metre has been applied to the subject asset. The effective date of the valuation is 30 June 2019.

Specialised land includes Crown Land which is measured at fair value with regard to the property’s highest and best use after due consideration is made for any legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset. Theoretical opportunities that may be available in relation to the assets are not taken into account until it is virtually certain that any restrictions will no longer apply. Therefore, unless otherwise disclosed, the current use of these non-financial physical assets will be their highest and best use.

For all assets measured at fair value, the current use is considered the highest and best use.

The hospital acquires new vehicles and at times disposes of them before completion of their economic life. The process of acquisition, use and disposal in the market is managed by the hospital who set relevant depreciation rates during use to reflect the consumption of the vehicles. As a result, the fair value of vehicles does not differ materially from the carrying amount (depreciated cost).

Plant and Equipment

There were no changes in valuation techniques throughout the period to 30 June 2019.

Plant and equipment (including medical equipment, computers and communication equipment and furniture and fittings) are held at carrying amount (depreciated cost). When plant and equipment is specialised in use, such that it is rarely sold other than as part of a going concern, the depreciated replacement cost is used to estimate the fair value. Unless there is market evidence that current replacement costs are significantly different from the original acquisition cost, it is considered unlikely that depreciated replacement cost will be materially different from the existing carrying amount.

The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible and financially feasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land would be classified as Level 3 assets.

For the hospital, the depreciated replacement cost method is used for the majority of specialised buildings, adjusting for the associated depreciation. As depreciation adjustments are considered as significant and unobservable inputs in nature, specialised buildings are classified as Level 3 for fair value measurements.

An independent valuation of hospital’s specialised land and specialised buildings was performed by the Valuer-General Victoria. The valuation was performed using the market approach adjusted for CSO. The effective date of the valuation is 30 June 2019.

Vehicles

During the reporting period, the hospital held Crown Land. The nature of this asset means that there are certain limitations and restrictions imposed on its use and/or disposal that may impact their fair value.

Consideration of Highest and Best Use (HBU) for Non-Financial Physical Assets

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018$'000 $'000

LandLand at Fair Value - Crown 2,160 2,335 - Freehold 43,568 47,061

Total Land 45,728 49,396

Buildings Buildings at Fair Value 138,178 124,730 less Accumulated Depreciation (11) (36,217)

Total Buildings 138,167 88,513

Plant and Equipment Plant and Equipment at Fair Value 3,753 3,651 less Accumulated Depreciation (2,950) (2,630)

Total Plant and Equipment 803 1,021

Medical EquipmentMedical Equipment at Fair Value 18,809 16,962 less Accumulated Depreciation (11,383) (10,469)

Total Medical Equipment 7,426 6,493

Assets Under ConstructionPP&E Assets Under Construction 33,845 76,467

Total Assets Under Construction 33,845 76,467

Total Property, Plant & Equipment 225,969 221,890

Note 4.2 (a) Gross Carrying Amount and Accumulated Depreciation

54

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Not

es t

o th

e Fi

nanc

ial S

tate

men

tsTh

e Roy

al V

icto

rian

Eye

and

Ear

Hos

pita

lfo

r th

e ye

ar e

nded

30

June

201

9

No

te 4

.2 (

b)

Rec

onci

liati

on

of

the

Car

ryin

g A

mo

un

t b

y C

lass

of

Ass

et

Lan

dB

uild

ing

sP

lan

t &

Med

ical

A

sset

s U

nd

er

Tota

lEq

uip

men

tEq

uip

men

tC

on

stru

ctio

n$

'00

0$

'00

0$

'00

0$

'00

0$

'00

0$

'00

0

Bal

ance

at

1 J

uly

20

17

49

,39

6

96

,96

1

2,4

37

6

,08

7

37

,58

6

19

2,4

67

Addi

tions

-

-

353

1,

806

40,7

56

42,9

15

Dis

posa

ls-

-

(1

6)

(1

63)

-

(1

79)

N

et T

rans

fers

bet

wee

n Cla

sses

-

3,31

8

(1

,443

)

-

(1,8

75)

-

D

epre

ciat

ion

(Not

e 4.

4)-

(1

1,76

6)

(310

)

(1,2

37)

-

(1

3,31

3)

Bal

ance

at

1 J

uly

20

18

49

,39

6

88

,51

3

1,0

21

6

,49

3

76

,46

7

22

1,8

90

Addi

tions

-

3,50

4

18

2,08

1

33

,826

39

,429

D

ispo

sals

-

-

-

(19)

-

(19)

Asse

ts W

ritt

en B

ack

and

Tran

sfer

red

to E

xpen

se-

-

-

-

(6

)

(6)

Rev

alua

tion

Incr

emen

ts/(

Dec

rem

ents

)(3

,668

)

(18,

677)

-

-

-

(2

2,34

5)

Net

Tra

nsfe

rs b

etw

een

Cla

sses

-

76,2

29

88

12

5

(76,

442)

-

D

epre

ciat

ion

(Not

e 4.

4)-

(1

1,40

2)

(324

)

(1,2

54)

-

(1

2,98

0)

Bal

ance

at

30

Ju

ne

20

19

45

,72

8

13

8,1

67

80

3

7

,42

6

33

,84

5

22

5,9

69

Lan

d a

nd

Bu

ildin

gs

Car

ried

at

Val

uat

ion

The

Valu

er-G

ener

al V

icto

ria

unde

rtoo

k to

re-

valu

e al

l of

the

hosp

ital's

land

and

bui

ldin

gs t

o de

term

ine

thei

r fa

ir v

alue

. Th

e va

luat

ion,

whi

ch c

onfo

rms

to A

ustr

alia

n Va

luat

ion

Sta

ndar

ds,

was

det

erm

ined

by

refe

renc

e to

the

am

ount

s fo

r w

hich

ass

ets

coul

d be

exc

hang

ed b

etw

een

know

ledg

eabl

e w

illin

g pa

rtie

s in

an

arm

's le

ngth

tr

ansa

ctio

n. T

he v

alua

tion

was

bas

ed o

n in

depe

nden

t as

sess

men

ts.

The

effe

ctiv

e da

te o

f th

e va

luat

ion

is 3

0 Ju

ne 2

019.

55

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 4.2 (c) Fair Value Measurement Hierarchy for Assets

Level 1 (i) Level 2 (i) Level 3 (i)

$'000 $'000 $'000 $'000

LandNon-Specialised Land at Fair Value 4,880 - 4,880 - Specialised Land at Fair Value 40,848 - - 40,848

Total Land at Fair Value 45,728 - 4,880 40,848

BuildingsNon-Specialised Buildings at Fair Value 3,490 - 3,490 - Specialised Buildings at Fair Value 134,677 - - 134,677

Total Buildings at Fair Value 138,167 - 3,490 134,677

Plant and EquipmentPlant and Equipment at Fair Value 803 - - 803

Medical EquipmentMedical Equipment at Fair Value 7,426 - - 7,426

Assets Under ConstructionAssets Under Construction at Fair Value 33,845 - - 33,845

Total Property, Plant and Equipment At Fair Value 225,969 - 8,370 217,599

Level 1 (i) Level 2 (i) Level 3 (i)

$'000 $'000 $'000 $'000

LandNon-Specialised Land at Fair Value 4,505 - 4,505 - Specialised Land at Fair Value 44,891 - - 44,891

Total Land at Fair Value 49,396 - 4,505 44,891

BuildingsNon-Specialised Buildings at Fair Value 2,435 - 2,435 - Specialised Buildings at Fair Value 86,078 - - 86,078

Total Buildings at Fair Value 88,513 - 2,435 86,078

Plant and EquipmentPlant and Equipment at Fair Value 1,021 - - 1,021

Medical EquipmentMedical Equipment at Fair Value 6,493 - - 6,493

Assets Under ConstructionAssets Under Construction at Fair Value 76,467 - - 76,467

Total Property, Plant and Equipment At Fair Value 221,890 - 6,940 214,950

There have been no transfers between levels during the period.

Fair Value Measurement at End of Reporting Period using:

Carrying Amount as at 30 June 2019

(i) Classified in accordance with the fair value hierarchy.

Carrying Amount as at 30 June 2018

Fair Value Measurement at End of Reporting Period using:

56

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Not

es t

o th

e Fi

nanc

ial S

tate

men

tsTh

e Roy

al V

icto

rian

Eye

and

Ear

Hos

pita

lfo

r th

e ye

ar e

nded

30

June

201

9

No

te 4

.2 (

d)

Rec

onci

liati

on

of

Leve

l 3 F

air

Val

ue

Mea

sure

men

t

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

Op

enin

g B

alan

ce a

t 1

Ju

ly 2

01

844

,891

86

,078

1,

021

6,49

3

76

,467

21

4,95

0

Ad

ditio

ns /

(D

ispo

sals

)-

3,

504

18

2,

062

33,8

26

39,4

10

Tran

sfer

s In

(O

ut)

of A

sset

Cla

sses

-

76,2

29

88

12

5

(76,

442)

-

Gai

ns /

(Lo

sses

) Rec

ogni

sed

in N

et R

esul

t-

Dep

reci

atio

n-

(1

1,34

5)

(324

)

(1,2

54)

-

(1

2,92

3)

- Ass

ets

Wri

tten

Bac

k an

d Tr

ansf

erre

d to

Exp

ense

-

-

-

-

(6)

(6

)

Item

s Rec

ogni

sed

in O

ther

Com

preh

ensi

ve I

ncom

e-

Rev

alua

tion

(4,0

43)

(1

9,78

9)

-

-

-

(23,

832)

Clo

sin

g B

alan

ce a

t 3

0 J

un

e 2

01

94

0,8

48

1

34

,67

7

8

03

7,4

26

3

3,8

45

2

17

,59

9

Op

enin

g B

alan

ce a

t 1

Ju

ly 2

01

744

,891

94

,459

2,

437

6,08

7

37

,586

18

5,46

0

Ad

ditio

ns /

(D

ispo

sals

)-

-

33

7

1,64

3

40

,756

42

,736

Tr

ansf

ers

In (

Out

) of

Ass

et C

lass

es-

3,

318

(1,4

43)

-

(1

,875

)

-

Gai

ns /

(Lo

sses

) Rec

ogni

sed

in N

et R

esul

t-

Dep

reci

atio

n-

(1

1,69

9)

(310

)

(1,2

37)

-

(1

3,24

6)

Clo

sin

g B

alan

ce a

t 3

0 J

un

e 2

01

84

4,8

91

8

6,0

78

1

,02

1

6,4

93

7

6,4

67

2

14

,95

0

Pla

nt

and

Eq

uip

men

tA

sset

s U

nd

er

Co

nst

ruct

ion

Med

ical

Eq

uip

men

tTo

tal

Lan

dB

uild

ing

s

57

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Asset Class

2019 2018$'000 $'000

Balance at Beginning of Reporting Period 89,773 89,773

(3,668) - - Buildings (18,677) -

67,428 89,773

42,079 45,747 25,349 44,026

67,428 89,773

Plant and Equipment

Vehicles

Specialised Buildings Depreciated replacement cost approach

Cost per square metreUseful life

Specialised Land (Crown / Freehold)

Non-Specialised Land

Non-Specialised Buildings

Depreciated replacement cost approach

Cost per square metreUseful life

Market approach CSO adjustments (20%)

Market approach N/A

Market approach N/A

Balance at End of the Reporting Period

Note 4.2 (e) Fair Value Determination

Note 4.2 (f) Property, Plant and Equipment Revaluation Surplus

Revaluation Increment/(Decrements): - Land

Balance at End of the Reporting Period *

* Represented by: - Land - Buildings

Likely Valuation Approach

Significant Inputs (Level 3 only)

Market approach N/A

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 4.3: Intangible Assets

2019 2018$'000 $'000

9,234 8,482 (7,001) (6,719)

2,233 1,763

698 841

2,931 2,604

Computer Software

Computer Software

Total

Work in Progress

$'000 $'000 $'000

2,088 438 2,526

69 403 472 (394) - (394)

1,763 841 2,604

50 558 608 701 (701) -

(281) - (281)

2,233 698 2,931

Assets transferred between Classes

Amortisation (Note 4.4)

Balance at 1 July 2018

Additions

Computer Software

Amortisation (Note 4.4)

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Additions

Note 4.3 (a) Gross Carrying Amount and Accumulated Amortisation

Balance at 1 July 2017

Less Accumulated Amortisation

Computer Software - Work in Progress

Total Intangible Assets

Note 4.3 (b) Reconciliation of the Carrying Amount by Class of Asset

Balance at 30 June 2019

Intangible assets represent identifiable non-monetary assets without physical substance such as computer software.

Intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the hospital.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 4.4: Depreciation and Amortisation

2019 2018$'000 $'000

DepreciationBuildings 11,402 11,766 Plant and Equipment 324 310 Medical Equipment 1,254 1,237

Total Depreciation 12,980 13,313

AmortisationComputer Software 281 394

Total Depreciation and Amortisation 13,261 13,707

2019 2018Buildings

2 to 60 years 2 to 60 years2 to 15 years 2 to 15 years

2 to 15 years 2 to 15 years2 to 15 years 2 to 15 years3 to 20 years 3 to 20 years4 to 10 years 4 to 10 years2 to 10 years 2 to 10 years

As part of the buildings valuation, building values were separated into components and each component assessed for its useful life which is represented above.

- Site Engineering Services and Central PlantCentral Plant - Fit Out - Trunk Reticulated Building Systems

Medical EquipmentPlant & Equipment

Intangible Assets

- Structure Shell Building Fabric

The following table indicates the expected useful lives of non current assets on which the depreciation charges are based:

Depreciation

Amortisation

Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life.

All buildings, plant and equipment and other non-financial physical assets (excluding land and investment properties) that have finite useful lives are depreciated. Depreciation is generally calculated on a straight-line basis at rates that allocate the asset’s value, less any estimated residual value over its estimated useful life (refer AASB 116 Property, Plant and Equipment).

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 4.5: Investment Properties

(a) Movements in Carrying Value for Investment Properties as at 30 June 2019

2019 2018$'000 $'000

Balance at Beginning of Period 14,311 13,545 (1,701) 766

Balance at End of Period 12,610 14,311

(b) Fair Value Measurement Hierarchy for Investment Properties

Level 1 (i) Level 2 (i) Level 3 (i)

Investment properties 12,610 - 12,610 -

12,610 - 12,610 -

Level 1 (i) Level 2 (i) Level 3 (i)

Investment properties 14,311 - 14,311 -

14,311 - 14,311 -

(i) classified in accordance with the fair value hierarchy.

There were no transfers between levels of the fair value measurement hierarchy during the period.

Net Gain/(Loss) from Fair Value Adjustments

The fair value of the hospital’s investment properties at 30 June 2018 were based on the 30 June 2017 valuation adjusted by the Valuer-General Victoria land indexation factors for the financial year.

Investment Properties

Investment properties represent properties held to earn rentals or for capital appreciation or both. Investment properties exclude properties held to meet service delivery objectives of the hospital.

The fair value of the hospital’s investment properties at 30 June 2019 were based on an independent valuation carried out by the Valuer-General Victoria. The valuation was determined by reference to market evidence of transactions for similar properties with no significant unobservable adjustments, in the same location and condition and subject to similar lease and other contracts.

Investment properties are initially recognised at cost. Costs incurred subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the hospital.

Carrying amount as at 30 June 2019

Fair Value Measurement at End of Reporting Period using:

Carrying amount as at 30 June 2018

Fair Value Measurement at End of Reporting Period using:

Subsequent to initial recognition at cost, investment properties are revalued to fair value, determined annually by independent valuers and/or reference to Valuer-General Victoria indices. Fair values are determined based on a market comparable approach that reflects recent transaction prices for similar properties. Investment properties are neither depreciated nor tested for impairment.

For investment properties measured at fair value, the current use of the asset is considered the highest and best use.

Rental revenue from leasing of investment properties is recognised in the comprehensive operating statement in the periods in which it is receivable on a straight line basis over the lease term.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 5: Other Assets and Liabilities

Note 5.1: Receivables2019 2018$'000 $'000

CurrentContractual

132 434 637 2,092 417 509 406 265

(145) (58) (76) (57)

Total Contractual 1,371 3,185

Statutory406 321

- 660

Total Statutory 406 981

Total Current Receivables 1,777 4,166

Non-CurrentStatutory

3,131 1,960

Total Non-Current Receivables 3,131 1,960

Total Receivables 4,908 6,126

Impairment Losses of Contractual Receivables

Refer Note 7.1 (c) for the hospital’s contractual receivables impairment losses.

Receivables consist of:● Contractual receivables, which consists of debtors in relation to goods and services and accrued investment income. These receivables are classified as financial instruments and categorised as ‘financial assets at amortised costs’. They are initially recognised at fair value plus any directly attributable transaction costs. The hospital holds the contractual receivables with the objective to collect the contractual cash flows and therefore subsequently measured at amortised cost using the effective interest method, less any impairment; and

● Statutory receivables, which predominantly includes amounts owing from the Victorian Government and Goods and Services Tax (GST) input tax credits recoverable. Statutory receivables do not arise from contracts and are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments for disclosure purposes. The hospital applies AASB 9 for initial measurement of the statutory receivables and as a result statutory receivables are initially recognised at fair value plus any directly attributable transaction cost.

Trade debtors are carried at nominal amounts due and are due for settlement within 30 days from the date of recognition.

Receivables Recognition

Long Service Leave - Department of Health and Human Services

- Trade Debtors - Patient Fees

GST ReceivableDepartment of Health and Human Services

5.2 Payables

This section sets out those assets and liabilities that arose from the hospital's operations.

Structure:5.1 Receivables

Accrued Revenue

less Allowance for Impairment of Contractual Receivables:

5.5 Inventories

5.3 Other Liabilities

Inter Hospital DebtorsTrade DebtorsPatient Fees

5.4 Other Assets

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 5.2: Payables

2019 2018$'000 $'000

CurrentContractual

2,483 2,275 3,824 3,932 2,400 3,227

Total Contractual 8,707 9,434

Statutory385 -

Fringe Benefits Tax Payable - 31

Total Statutory 385 31

Total Current Payables 9,092 9,465

Total Payables 9,092 9,465

Note 5.3: Other Liabilities

2019 2018$'000 $'000

Current9 9

57 42

Total Current 66 51

Total Other Liabilities 66 51

* Monies Held in Trust

9 9

Total Monies Held in Trust 9 9

- Cash AssetsRepresented by the following assets:

Bond Monies Held in Trust *Income in Advance

● Statutory payables, that are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from contracts.

The normal credit terms for accounts payable are usually 30 days from the end of month of invoice.

Maturity Analysis of Payables

Refer Note 7.1 (b) for the ageing analysis of payables.

Department of Health and Human Services Payable

Payables Recognition

Payables consist of:● Contractual payables, classified as financial instruments and measured at amortised cost. Accounts payable and salaries and wages payable represent liabilities for goods and services provided to the hospital prior to the end of the financial year that are unpaid; and

Accounts PayableAccrued ExpensesAccrued Salaries and Wages

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 5.4: Other Assets

2019 2018$'000 $'000

Current1,175 804

- 125

Total Other Assets 1,175 929

Note 5.5: Inventories

2019 2018$'000 $'000

Pharmaceuticals At Cost 270 244 Cochlear Implant Devices At Cost - 25

Total Inventories 270 269

Inventories

Inventories include goods and other property held either for sale, consumption or for distribution at no or nominal cost in the ordinary course of business operations. It excludes depreciable assets.

Inventories held for distribution are measured at cost, adjusted for any loss of service potential. All other inventories are measured at the lower of cost and net realisable value.

Inventories acquired for no cost or nominal considerations are measured at current replacement cost at the date of acquisition.

The basis used in assessing loss of service potential for inventories held for distribution include current replacement cost and technical or functional obsolescence. Technical obsolescence occurs when an item still functions for some or all the tasks it was originally acquired to do, but no longer matches existing technologies. Functional obsolescence occurs when an item no longer functions the way it did when it was first acquired.

PrepaymentsAccrued Investment Interest

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 6: Operational Financing

2019 2018$'000 $'000

Non-Current

8,346 7,788

8,346 7,788

Total Borrowings 8,346 7,788

Note 6.2: Cash and Cash Equivalents

2019 2018$'000 $'000

3 3 453 151

34,733 5,210 Deposits at Call (Monies Held in Trust) 9 9

Total Cash and Cash Equivalents 35,198 5,373

6.3 Commitments for Expenditure

For cash flow statement presentation purposes, cash and cash equivalents include bank overdrafts, which are included as liabilities on the balance sheet. The cash flow statement includes monies held in trust.

Maturity Analysis of Borrowings

Refer Note 7.1 (b) for the ageing analysis of Borrowings.

Cash on Hand (excluding Monies Held in Trust)Cash at Bank (excluding Monies Held in Trust)Deposits at Call (excluding Monies Held in Trust)

Cash and cash equivalents recognised on the balance sheet comprise cash on hand and cash at bank, deposits at call and highly liquid investments (with an original maturity of three months or less), which are held for the purpose of meeting short term cash commitments rather than for investment purposes, which are readily convertible to known amounts of cash with an insignificant risk of changes in value.

6.4 Commitments for Income

During the current and prior year, there were no defaults and breaches of any of the loans.

(i) Unsecured loan which bears no interest.

Defaults and Breaches

Note 6.1: Borrowings

Department of Health and Human Services Loan (i)

Total Non-Current Borrowings

This section includes disclosures of balances that are financial instruments (such as cash balances). Note: 7.1 provides additional, specific financial instrument disclosures.

This section provides information on the sources of finance utilised by the hospital during its operations, along with other information related to financing activities of the hospital.

6.2 Cash and Cash Equivalents6.1 BorrowingsStructure:

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 6.3: Commitments for Expenditure

2019 2018$'000 $'000

15,738 10,844 13,030 26,530

28,768 37,374

8,505 6,519 12,591 8,160

Total Operating Expenditure Commitments 21,096 14,679

49,864 52,053

(2,118) (1,445)

47,746 50,608

Note 6.4: Commitments for Income

2019 2018$'000 $'000

677 561 1,043 997

102 116

1,822 1,674

1,822 1,674

(166) (152)

1,656 1,522

less GST Payable to the Australian Tax Office

Total Commitments for Income (exclusive of GST)

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Total Commitments for Income (inclusive of GST)

Commitments

Later than 1 year and not later than 5 years

Later than 1 year and not later than 5 years

Total Capital Expenditure Commitments

Operating Expenditure Commitments:

Capital Expenditure Commitments:

Not later than one year

Total Commitments in Relation to Leases Receivable

Later than 5 years

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are disclosed at their nominal value and are inclusive of the GST payable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of significant projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised on the Balance Sheet.

Total Commitments for Expenditure (exclusive of GST)

Not later than one yearLater than 1 year and not later than 5 years

Total Commitments for Expenditure (inclusive of GST)

less GST Recoverable from the Australian Tax Office

Commitments in Relation to Leases Receivable:

Not later than one year

Capital expenditure commitments include contributions to the hospital building redevelopment project that are payable to the Department of Health and Human Services that are not subject to GST.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 7: Risks, Contingencies and Valuation Uncertainties

Note 7.1: Financial Instruments

Financial Assets at Amortised

Cost

Financial Assets at Fair Value through

Net Result

Financial Liabilities at Amortised

Cost

Total

$'000 $'000 $'000 $'0002019

Contractual Financial AssetsCash and Cash Equivalents 35,198 - - 35,198 Receivables - Trade Debtors 769 - - 769 - Other Receivables 823 - - 823 Other Financial Assets - Managed Investment Schemes - 43,617 - 43,617

Total Contractual Financial Assets (i) 36,790 43,617 - 80,407

Contractual Financial LiabilitiesPayables - - 8,707 8,707 Borrowings - - 8,346 8,346 Other Financial Liabilities - - 66 66

Total Contractual Financial Liabilities (i) - - 17,119 17,119

The hospital is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which for the hospital is related mainly to fair value determination.

Structure:7.1 Financial Instruments

(i) The carrying amount excludes statutory receivables (ie. GST receivable) and statutory payables (ie. Department of Health and Human Services payable).

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the hospital's activities, certain financial assets and financial liabilities arise under statute rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

Note 7.1 (a) Financial Instruments: Categorisation

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Contractual Financial

Assets - Loans and

Receivables and Cash

Contractual Financial Assets -

Available for Sale

Contractual Financial

Liabilities at Amortised

Cost

Total

$'000 $'000 $'000 $'0002018

Contractual Financial AssetsCash and Cash Equivalents 5,373 - - 5,373 Receivables - Trade Debtors 2,526 - - 2,526 - Other Receivables 774 - - 774 Other Financial Assets - Term Deposit 35,000 - - 35,000 - Managed Investment Schemes - 45,520 - 45,520

Total Contractual Financial Assets (i) 43,673 45,520 - 89,193

Contractual Financial LiabilitiesPayables - - 9,434 9,434 Borrowings - - 7,788 7,788 Other Financial Liabilities - - 51 51

Total Contractual Financial Liabilities (i) - - 17,273 17,273

Equity instruments that are held for trading as well as derivative instruments are classified as fair value through net result. Other financial assets are required to be measured at fair value through net result unless they are measured at amortised cost or fair value through other comprehensive income as explained above.

However, as an exception to those rules above, the hospital may, at initial recognition, irrevocably designate financial assets as measured at fair value through net result if doing so eliminates or significantly reduces a measurement or recognition inconsistency (‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

The hospital recognises listed equity securities as mandatorily measured at fair value through net result and designated all of its managed investment schemes as well as certain 5-year government bonds as fair value through net result.

(i) The carrying amount excludes statutory receivables (ie. GST receivable and Department of Health and Human Services receivable) and statutory payables (ie. Department of Health and Human Services payable).

Note 7.1 (a) Financial Instruments: Categorisation (continued)

From 1 July 2018, the hospital applies AASB 9 and classifies all of its financial assets based on the business model for managing the assets and the asset’s contractual terms.

Categories of Financial Assets under AASB 9:

Financial assets are measured at amortised costs if both of the following criteria are met and the assets are not designated as fair value through net result:• The assets are held by the hospital to collect the contractual cash flows, and• The assets’ contractual terms give rise to cash flows that are solely payments of principal and interest.

These assets are initially recognised at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method less any impairment.

The hospital recognises the following assets in this category:• Cash and cash equivalents;• Receivables (excluding statutory receivables); and• Term deposits.

Financial Assets at Amortised Cost

Financial Assets at Fair Value through Net Result

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Derecognition of Financial Assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: ● The rights to receive cash flows from the asset have expired; or ● The hospital retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or ● The hospital has transferred its rights to receive cash flows from the asset and either: (a) has transferred substantially all the risks and rewards of the asset; or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the hospital has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of the hospital’s continuing involvement in the asset.

Financial Liabilities at Amortised Cost are initially recognised on the date that they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method. The hospital recognises the following liabilities in this category:• Payables (excluding statutory payables); and• Borrowings.

Derecognition of Financial Liabilities: A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Impairment of Financial Assets: At the end of each reporting period, the hospital assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets are subject to annual review for impairment.

The allowance is the difference between the financial asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. In assessing impairment of statutory (non-contractual) financial assets, which are not financial instruments, professional judgement is applied in assessing materiality using estimates, averages and other computational methods in accordance with AASB 136 Impairment of Assets .

Categories of Financial Assets previously under AASB 139:

Loans and Receivables and Cash are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets and liabilities are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, loans and receivables are measured at amortised cost using the effective interest method (and for assets, less any impairment). The hospital recognised the following assets in this category:• Cash and deposits;• Receivables (excluding statutory receivables); and• Term deposits.

Available-for-Sale Financial Instrument Assets are those designated as available-for-sale or not classified in any other category of financial instrument asset. Such assets are initially recognised at fair value. Subsequent to initial recognition, they are measured at fair value with gains and losses arising from changes in fair value, recognised in ‘Other economic flows – other comprehensive income’ until the investment is disposed. Movements resulting from impairment and foreign currency changes are recognised in the net result as other economic flows. On disposal, the cumulative gain or loss previously recognised in ‘Other economic flows – other comprehensive income’ is transferred to other economic flows in the net result.

Categories of Financial Liabilities under AASB 9 and previously under AASB 139:

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018$'000 $'000

Balance at Beginning of the Year (115) (83) Opening Retained Earnings Adjustment on Adoption of AASB 9 (254) -

(369) (83)

- (76) 45 44

103 -

(221) (115)

The statutory receivables are considered to have low credit risk, taking into account the counterparty’s credit rating, risk of default and capacity to meet contractual cash flow obligations in the near term. As the result, the loss allowance recognised for these financial assets during the period was limited to 12 months expected losses. No loss allowance recognised at 30 June 2018 under AASB 139. No additional loss allowance required upon transition into AASB 9 on 1 July 2018.

Opening Loss Allowance

Balance at End of the Year

Increase in Provision Recognised in the Net ResultReversal of Provision of Receivables Written Off During the Year as UncollectibleReversal of Unused Provision Recognised in the Net Result

Statutory Receivables at Amortised Cost [AASB2016-8.4]:

Note 7.1 (c) Contractual Receivables at Amortised Cost

Reconciliation of the Movement in the Loss Allowance for Contractual Receivables

Credit loss allowance is classified as other economic flows in the net result. Contractual receivables are written off when there is no reasonable expectation of recovery and impairment losses are classified as a transaction expense. Subsequent recoveries of amounts previously written off are credited against the same line item.

In prior years, a provision for doubtful debts was recognised when there is objective evidence that the debts may not be collected and bad debts are written off when identified. A provision was made for estimated irrecoverable amounts from the sale of goods and services when there is objective evidence that an individual receivable is impaired. Bad debts were considered as written off by mutual consent.

The hospital’s non-contractual receivables arising from statutory requirements are not financial instruments. However, they are nevertheless recognised and measured in accordance with AASB 9 requirements as if those receivables are financial instruments.

Impairment of Financial Assets under AASB 9 – Applicable from 1 July 2018

From 1 July 2018, the hospital has been recording the allowance for expected credit loss for the relevant financial instruments, replacing AASB 139’s incurred loss approach with AASB 9’s expected credit loss approach. Subject to AASB 9 impairment assessments include the hospital’s contractual receivables, statutory receivables and its investment in debt instruments.

Equity instruments are not subject to impairment under AASB 9. Other financial assets mandatorily measured or designated at fair value through net result are not subject to impairment assessment under AASB 9. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial.

Contractual Receivables at Amortised Cost

The hospital applies AASB 9's simplified approach for all contractual receivables to measure expected credit losses using a lifetime expected loss allowance based on the assumptions about risk of default and expected loss rates. The hospital has grouped contractual receivables on shared credit risk characteristics and days past due and select the expected credit loss rate based on the hospital’s past history, existing market conditions, as well as forward‑looking estimates at the end of the financial year.

On this basis, the hospital determines the opening loss allowance on initial application date of AASB 9 and the closing loss allowance at end of the financial year as disclosed above.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 8: Other Disclosures

2019 2018$'000 $'000

14,429 36,448

12,979 13,313 281 394

1,701 (766) 1,903 -

559 (892) - 18

(148) - (24,876) (30,762)

- 101

19 179

1,238 (1,974) (371) (93)

(2) 128 447 (1,356)

1,806 2,004 15 2

9,980 16,744

Note 8.1: Reconciliation of Net Result for the Year to Net Cash Inflow/(Outflow) from Operating Activities

Resources/Assets Provided Free of Charge

(Increase)/Decrease in Inventories

Net Cash Inflow / (Outflow) from Operating Activities

(Increase)/Decrease in Prepayments

Depreciation

(Gain)/Loss on Revluation of Investment Property

Provision for Doubtful Debts

Non-Cash Movements:

Net Result for the Period

Discount Interest on Financial Instruments

Allowance for Impairment of Contractual ReceivablesNon-Cash DHHS Government Grants

Increase/(Decrease) in Payables Increase/(Decrease) in Provisions Increase/(Decrease) in Other Liabilities

Net (Gain)/Loss from Disposal of Non-Financial Physical Assets

Change in Operating Assets and Liabilities: (Increase)/Decrease in Receivables

Movements Included in Investing and Financing Activities:

Movements in Assets and Liabilities:

Amortisation of Intangible Non-Produced Assets

Net (Gain)/Loss on Financial Instruments at Fair Value

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.

Structure:

8.6 Ex-gratia payments

8.1 Reconciliation of Net Result for the Year to Net Cash Inflow/(Outflow) from Operating Activities8.2 Responsible Persons8.3 Remuneration of Executives8.4 Related Parties

8.8 Economic Dependency

8.10 AASBs Issued that are Not Yet Effective

8.5 Remuneration of Auditors

8.7 Events Occurring After the Balance Sheet Date

8.9 Changes in Accounting Policy and Revision of Estimates

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Governing Board:

Accountable Officer:Mr Mark Petty

2019 2018Income Band Number Number

$0 - $9,999 - 1 $10,000 - $19,999 1 - $20,000 - $29,999 7 6 $50,000 - $59,999 1 1 $340,000 - $349,999 - 1 $360,000 - $369,999 1 -

Total Numbers 10 9

2019 2018$'000 $'000

613 538 Total remuneration received or due and receivable by Responsible Persons from the reporting entity amounted to:

The Honourable Jill Hennessy, Minister for Health, Minister for Ambulance Services 1/7/2018 - 29/11/2018

1/7/2018 - 30/6/2019

Mr Bruce Ryan 1/7/2018 - 30/6/2019

The number of Responsible Persons are shown in their relevant income bands:

1/7/2018 - 30/6/2019

Remuneration of Responsible Persons

The Honourable Jenny Mikakos, Minister for Health, Minister for Ambulance Services 29/11/2018 - 30/6/2019

1/7/2018 - 30/6/2019

1/7/2018 - 30/6/2019

Ms Linda Hornsey

Dr Sherene Devanesen

Mr Simon Brewin

Ms Llewellyn PrainMr David Anderson

1/7/2018 - 30/6/2019

1/7/2018 - 30/6/20191/7/2018 - 30/6/2019

Associate Professor Deborah Colville1/7/2018 - 30/6/2019

In accordance with the Ministerial Directions issued by the Assistant Treasurer under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Period

Relevant Minister:

Note 8.2: Responsible Persons

Mr Bruce MildenhallDr Karen Owen

1/7/2018 - 30/6/2019

Amounts relating to Responsible Ministers are reported within the Department of Parliamentary Services' Financial Report.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Note 8.3: Remuneration of Executives

2019 2018$'000 $'000

883 846 82 85 26 22

991 953

6 4

3.89 3.80

Note 8.4: Related Parties

Short Term Employee BenefitsPost-Employment Benefits

The Board of Directors and the Executive Directors of the hospital are deemed to be KMPs.

· Mr Ian Leong, Executive Director Redevelopment, Planning and Infrastructure; and· Mr Danny Mennuni, Executive Director Finance and Corporate Services and Chief Finance and Accounting Officer.

Other Long-Term Benefits

Key Management Personnel of hospital:

KMPs are those people with the authority and responsibility for planning, directing and controlling the activities of the hospital, directly or indirectly.

Long service leave, other long-service benefit or deferred compensation.

Remuneration of Executives (including Key Management Personnel disclosed in Note 8.4)

Remuneration comprises employee benefits in all forms of consideration paid, payable or provided in exchange for services rendered, and is disclosed in the following categories:

Salaries and wages, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.

Pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased.

Short-Term Employee Benefits

Post-Employment Benefits

Other Long-Term Benefits

(i) The total number of executive officers includes persons who meet the definition of Key Management Personnel (KMP) of the hospital under AASB 124 Related Party Disclosures and are also reported within Note 8.4.

The hospital is a wholly owned and controlled entity of the State of Victoria. Related parties of the hospital include:

· Mr Simon Brewin, Non-Executive Director;

· Dr Jason Goh, Interim Executive Director Medical Services and Chief Medical Officer (18 February to 16 June 2019);

· Key Management Personnel (KMP) and their close family members;· Cabinet ministers and their close family members; and

(ii) Annualised Employee Equivalent is based on working 38 ordinary hours per week over the reporting period.

· Hospitals and public sector entities that are controlled and consolidated into the whole of state consolidated financial statements.

· Dr Sherene Devanesen, Chair Board of Directors;

· Dr Sean Jespersen, Executive Director Medical Services and Chief Medical Officer (17 June to 30 June 2019);

· Dr Karen Owen, Non-Executive Director;

· Ms Jenni Bliss, Executive Director Chief Operating Officer and Chief Nursing Officer;

· Mr Bruce Ryan, Non-Executive Director;

· Dr Caroline Clarke, Executive Director Medical Services and Chief Medical Officer (1 July 2018 to 17 February 2019);· Mr Mark Petty, Chief Executive Officer and Accountable Officer;

Total Remuneration (i)

Total Number of Executives

Total Annualised Employee Equivalents (AEE) (ii)

· Ms Llewellyn Prain, Non-Executive Director;

The number of executive officers, other than Ministers and Accountable Officers, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period.

· Mr David Anderson, Non-Executive Director;· Associate Professor Deborah Colville, Non-Executive Director;· Ms Linda Hornsey, Non-Executive Director;

· Mr Bruce Mildenhall, Non-Executive Director;

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

2019 2018$'000 $'000

1,442 1,331 127 130 35 30

1,604 1,491

2019 2018$'000 $'000

48 47

48 47 Total Auditor Remuneration

Professional medical indemnity insurance and other insurance products are obtained from the Victorian Managed Insurance Authority.

Victorian Auditor-General's OfficeAudit of Financial Statements

Note 8.6: Ex-Gratia Payments

The hospital made Nil ex-gratia payments for the year ending 30 June 2019. (The year ending 30 June 2018: Nil.)

Note 8.5: Remuneration of Auditors

The compensation detailed below is rounded to the nearest thousand dollars and excludes the salaries and benefits the Portfolio Ministers receives. The Ministers' remuneration and allowances is set by the Parliamentary Salaries and Superannuation Act 1968, and is reported within the Department of Parliamentary Services’ Financial Report.

Expenses incurred by the hospital in delivering services and outputs are in accordance with Health Purchasing Victoria requirements. Goods and services including procurement, diagnostics, patient meals and multi-site operational support are provided by other Victorian Health Service Providers on commercial terms.

Significant Transactions with Government Related Entities

Transactions with Key Management Personnel and Other Related Parties

The hospital received funding from the Department of Health and Human Services of $123.0 million (2018: $133.4 million) and indirect contributions of $1.3 million (2018: $0.1 million).

Other Long-Term Benefits

Short Term Employee BenefitsPost-Employment Benefits

Total (i)

Compensation - Key Management Personnel

(i) KMPs are also reported in Note 8.2 Responsible Persons or Note 8.3 Remuneration of Executives.

There were no related party transactions required to be disclosed for the hospital Board of Directors, Chief Executive Officer and Executive Directors in 2019.

Outside of normal citizen type transactions with the hospital, there were no related party transactions that involved key management personnel, their close family members and their personal business interests. No provision has been required, nor any expense recognised, for impairment of receivables from related parties. There were no related party transactions with Cabinet Ministers required to be disclosed in 2019.

Given the breadth and depth of State government activities, related parties transact with the Victorian public sector in a manner consistent with other members of the public, eg. stamp duty and other government fees and charges. Further employment of processes within the Victorian public sector occur on terms and conditions consistent with the Public Administration Act 2004 and Codes of Conduct and Standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.

The Standing Directions under the Financial Management Act 1994 require the hospital to hold cash (in excess of working capital) in accordance with the State’s centralised banking arrangements. All borrowings are required to be sourced from Treasury Corporation Victorian unless an exemption has been approved by the Minister for Health and Human Services and the Treasurer.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Loans and Receivables

and Cash

Availablefor

Sale

AmortisedCost

Fair Value through

Net Result

$'000 $'000 $'000 $'000

Loan and Receivables: - Sale of Goods and Services 2,526 - 2,272 - - Other Receivables 774 - 774 - Held to Maturity: - Term Deposits 35,000 - 35,000 - Available-for-Sale: - Managed Investment Schemes - 45,520 - 45,520

As at 1 July 2018 38,300 45,520 38,046 45,520

The hospital has elected to apply the limited exemption in AASB 9 paragraph 7.2.15 relating to transition for classification and measurement and impairment, and accordingly has not restated comparative periods in the year of initial application. As a result:(a) any adjustments to carrying amounts of financial assets or liabilities are recognised at the beginning of the current reporting period with the difference recognised in the opening retained earnings; and(b) financial assets and provision for impairment have not been reclassified and/or restated in the comparative period.

This note explains the impact of the adoption of AASB 9 Financial Instruments on the hospital's financial statements.

Changes to Classification and Measurement

Summary of Reclassification of Assets and Liabilities:

On initial application of AASB 9 on 1 July 2018, the hospital's management has assessed all financial assets based on the hospital's business models for managing the assets. The following are the changes in the classification of the hospital’s financial assets:

Note 8.7: Events Occurring After the Balance Sheet Date

Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the hospital and other parties, the transactions are only recognised when the agreement is irrevocable at or before the end of the reporting period.

Adjustments are made to amounts recognised in the financial statements for events which occur between the end of the reporting period and the date when the financial statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the end of the reporting period and the date the financial statements are authorised for issue where the events relate to conditions which arose after the end of the reporting period that are considered to be of material interest.

The hospital had no significant events that occurred after the balance sheet date.

AASB 9 Measurement Categories

Note 8.9: Changes in Accounting Policy and Revision of Estimates

Changes in Accounting Policy

AASB 139 Measurement Categories

AASB 139 Measurement Categories

Note 8.8: Economic Dependency

The hospital is dependent on the Department of Health and Human Services for the majority of its revenue used to operate the entity. At the date of this report, the Board of Directors has no reason to believe the Department will not continue to support the hospital.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

30/6/2018

$'000

(254)

Other Economic Flows Included in Net Result 254

(3,872)

Other Economic Flows – Other Comprehensive Income (3,872)

Comprehensive Income (3,618)

Balance SheetAmount at 30/6/2018

Reclassifi-cation

Remeasure-ment (ECL)

Restated amount at 1/7/2018

$'000 $'000 $'000 $'000

(115) - (254) (369)

Total Financial Assets (115) - (254) (369)

86,383 3,872 (254) 90,001

3,872 (3,872) - -

Total Equity 90,255 - (254) 90,001

Accumulated Surplus/(Deficit)

Changes to Financial Assets Available-for-Sale Revaluation Surplus

Comprehensive Operating Statement

Changes to the Impairment of Financial Assets

Transition Impact

Impact on Balance Sheet is illustrated with the following reconciliation between the carrying amounts under AASB 139 at 30 June 2018 and the balances reported under AASB 9 at 1 July 2018 for each affected balance sheet line item:

Under AASB 9, all loans and receivables as well as other debt instruments not carried at fair value through net result are subject to AASB 9's new expected credit loss (ECL) impairment model, which replaces AASB 139's incurred loss approach.

For other loans and receivables, the hospital applies the AASB 9 simplified approach to measure expected credit losses based on the change in the ECLs over the life of the asset. Application of the lifetime ECL allowance method resulted in an increase in the impairment loss allowance of $254,000. Refer to note 7.1 (c) for details about the calculation of the allowance. The loss allowance decreased by $148,000 for these financial assets during the financial year.

For debt instruments at amortised costs, the hospital considers them to be low risk and therefore determines the loss allowance based on ECLs associated with the probability of default in the next 12 months. Applying the ECL model does not result in recognition of additional loss allowance (previous loss allowance was nil). No further increase in allowance in the current financial year.

Impact on Comprehensive Income Statement as at 1 July 2018 as follows:

Financial Assets Available-for-Sale Revaluation Surplus

The transition impact of first-time adoption of AASB 9 on Comprehensive Operating Statement and Balance Sheet has been summarised in the following tables.

Impairment of Financial Assets

Impairment Loss Allowance

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Standard / Interpretation Applicable for Annual

Reporting Periods

BeginningAASB 15 Revenue from Contracts with Customers

01 Jan 2019

AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not for-Profit Entities

01 Jan 2019 This standard clarifies the application of AASB 15 and AASB 9 in a not-for-profit context. The areas within these standards that are amended for not-for-profit application include:AASB 9 • Statutory receivables are recognised and measured similarly to financial assets. AASB 15• The ‘customer’ does not need to be the recipient of goods and/or services;• The “contract” could include an arrangement entered into under the direction of another party;• Contracts are enforceable if they are enforceable by legal or ‘equivalent means’;• Contracts do not have to have commercial substance, only economic substance; and• Performance obligations need to be ‘sufficiently specific’ to be able to apply AASB 15 to these transactions.The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

AASB 2016-8 inserts Australian requirements and authoritative implementation guidance for not-for-profit-entities into AASB 9 and AASB 15. This Standard amends AASB 9 and AASB 15 to include requirements to assist not-for-profit entities in applying the respective standards to particular transactions and events.

Note 8.10: AASBs Issued that are Not Yet Effective

Certain new Australian accounting standards have been published that are not mandatory for the 30 June 2019 reporting period. The Department of Treasury and Finance assesses the impact of all these new standards and advises the hospital of their applicability and early adoption where applicable.

As at 30 June 2019, the following standards and interpretations had been issued by the AASB but were not yet effective. They become effective for the first financial statements for reporting periods commencing after the stated operative dates as detailed in the table below. The hospital has not and does not intend to adopt these standards early.

Summary Impact on Financial Statements

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer. Note that amending standard AASB 2015 8 Amendments to Australian Accounting Standards – Effective Date of AASB 15 has deferred the effective date of AASB 15 to annual reporting periods beginning on or after 1 January 2018, instead of 1 January 2017 for Not-for-Profit entities.

The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. Revenue from grants that are provided under an enforceable agreement that have sufficiently specific obligations, will now be deferred and recognised as the performance obligations attached to the grant are satisfied.The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Standard / Interpretation Applicable for Annual

Reporting Periods

BeginningAASB 16 Leases 01 Jan 2019

AASB 2018-8 Amendments to Australian Accounting Standards – Right of Use Assets of Not-for-Profit entities

01 Jan 2019

Summary Impact on Financial Statements

The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on balance sheet.

The assessment has indicated that most operating leases, with the exception of short term and low value leases will come on to the balance sheet and will be recognised as right of use assets with a corresponding lease liability. In the operating statement, the operating lease expense will be replaced by depreciation expense of the asset and an interest charge.There will be no change for lessors as the classification of operating and finance leases remains unchanged.The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

This standard amends various other accounting standards to provide an option for not-for-profit entities to not apply the fair value initial measurement requirements to a class or classes of right of use assets arising under leases with significantly below-market terms and conditions principally to enable the entity to further its objectives. This Standard also adds additional disclosure requirements to AASB 16 for not-for-profit entities that elect to apply this option.

Under AASB 1058, not-for-profit entities are required to measure right-of-use assets at fair value at initial recognition for leases that have significantly below-market terms and conditions. For right-of-use assets arising under leases with significantly below market terms and conditions principally to enable the entity to further its objectives (peppercorn leases), AASB 2018-8 provides a temporary option for Not-for-Profit entities to measure at initial recognition, a class or classes of right-of-use assets at cost rather than at fair value and requires disclosure of the adoption. The State has elected to apply the temporary option in AASB 2018-8 for not-for-profit entities to not apply the fair value provisions under AASB 1058 for these right-of-use assets. In making this election, the State considered that the methodology of valuing peppercorn leases was still being developed.The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

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Notes to the Financial StatementsThe Royal Victorian Eye and Ear Hospital

for the year ended 30 June 2019

Standard / Interpretation Applicable for Annual

Reporting Periods

BeginningAASB 1058 Income of Not-for-Profit Entities

01 Jan 2019

AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material

01 Jan 2020

AASB 1058 will replace the majority of income recognition in relation to government grants and other types of contributions requirements relating to public sector not-for-profit entities, previously in AASB 1004 Contributions. The restructure of administrative arrangement will remain under AASB 1004 and will be restricted to government entities and contributions by owners in a public sector context,AASB 1058 establishes principles for transactions that are not within the scope of AASB 15, where the consideration to acquire an asset is significantly less than fair value to enable not-for-profit entities to further their objective.

Grant revenue is currently recognised up front upon receipt of the funds under AASB 1004 Contributions.The timing of revenue recognition for grant agreements that fall under the scope of AASB 1058 may be deferred. For example, revenue from capital grants for the construction of assets will need to be deferred and recognised progressively as the asset is being constructed.The impact on current revenue recognition of the changes is the potential phasing and deferral of revenue recorded in the operating statement.The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

This Standard principally amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments refine and clarify the definition of material in AASB 101 and its application by improving the wording and aligning the definition across AASB Standards and other publications. The amendments also include some supporting requirements in AASB 101 in the definition to give it more prominence and clarify the explanation accompanying the definition of material.

The hospital has assessed the potential impact of this standard and determined that it is not expected to have a significant impact on the hospital.

Summary Impact on Financial Statements

Affiliations and Memberships

The Royal Victorian Eye and Ear Hospital is affiliated with:

Bionic Vision TechnologiesLions Eye Donations Service MelbourneThe HEARing CRCThe Bionics Institute

The Centre for Eye Research AustraliaThe University of MelbourneAustralian College of Optometry

The Royal Victorian Eye and Ear Hospital is a member of:

The World Association of Eye Hospitals

Members: Singapore National Eye Centre (Singapore), Moorfields Eye Hospital (London, UK), The Rotterdam Eye Hospital (Rotterdam, The Netherlands), Tun Hussein On National Eye Hospital (Kuala Lumpur, Malaysia), Rutnin Eye Hospital (Bangkok, Thailand), St. Erik Eye Hospital (Stockholm, Sweden), The Royal Victoria Eye and Ear Hospital (Dublin, Ireland), Jakarta Eye Center (Jakarta, Indonesia), Tianjin Medical University Eye Hospital (Tianjin, China), Sydney Eye Hospital (Sydney, Australia), Kim’s Eye Hospital (Seoul, South Korea), St. John of Jerusalem Eye Hospital, Kellogg Eye Center (Ann Arbor, USA), Foundation Asile des Aveugles (Lausanne, Switzerland), The Metta Eye Hospital (Mettapracharak (Wat Rai Khing) Hospital) (Bangkok – Thailand), Ispahani Islamia Eye Institute & Hospital (Bangladesh), Bascom Palmer Eye Institute (USA), Massachusetts Eye and Ear Infirmary (USA), Phillips Eye Institute (USA), Wilmer Eye Institute at Johns Hopkins (USA), Emory Eye Center (USA), New York Eye and Ear Infirmary (USA), Wills Eye Hospital (USA), Turin Ophthalmic Hospital (Italy), Hoftalon Eye Hospital (Brasil), Eye & Ent Hospital Fudan University (China), The Beijing TONGREN Hospital (China), The Niteroi Eye Hospital (Brasil), The Xi’an Eye Hospital (China), King Khaled Eye Specialist Hospital (Saudi Arabia), Aier Eye Hospital Group (China).

The American Association of Eye and Ear Centers of Excellence

Members: Bascom Palmer Eye Institute, Florida, USA; Emory Eye Centre, Georgia, USA; Massachusetts Eye and Ear Infirmary, Massachusetts, USA; Moorfields Eye Hospital, London, UK; New York Eye and Ear Infirmary, New York, USA; Phillips Eye Institute, Minnesota, USA; The Royal Victorian Eye and Ear Hospital, Melbourne, Australia; Rutnin Eye Hospital, Bangkok, Thailand; Singapore National Eye Centre, Singapore; St Eriks Eye Hospital, Stockholm, Sweden; Wills Eye Hospital, Pennsylvania, USA; Wilmer Eye Institute, Maryland, USA.

Victorian Healthcare Association

Melbourne Academic Centre for Health

The Royal Victorian Eye and Ear Hospital

E info@eyeandear.org.au T +61 3 9929 8666 F +61 3 9663 7203 TTY +61 3 9663 8052

Main Hospital 32 Gisborne Street East Melbourne Victoria 3002

Eye and Ear on the Park St Andrews Place East Melbourne Victoria 3002

www.eyeandear.org.au